I'd interact the regressor you are interested in with a dummy for the country being developed and see what happens. Its entirely possible that the mechanisms at play in developed contries are ...

I think that the main reason why the Solow model is a must in every undergrad curriculum is the Solow residual. The fact that the bulk of the differences of per capita income between countries is not ...

The main challenge in macroeconometrics as opposed to microeconometrics is a the small sample size, because of short recorded time-series and less than 200 countries providing data. To get around this ...

Using OLS on count and dummy variables is appropriate. The estimates are consistent. Using OLS instead of probit/logit is appropriate if the number of observations is sufficiently high. For example ...

If $oil_t$ is the worldwide price of oil, neither $\rho$ nor $e_t$ are determined in a country specific model (unless the country's economy is so large that it affects global oil demand, which is not ...

Several articles use data sets on this issue but I am not sure that all the data sets are freely available. Valencia & Laeven (2012) use the IMF country reports to create their data set. It ...

I've seen them summed somewhere but I cannot exactly remember where. Ultimately I don't think that it makes much difference. The quarterly sum is just the average multiplied by three. Since local ...

If a sufficient fraction of market participants follow technical analysis it can work as self-fulfilling prophecy. If some pattern occurs that technical analysis interprets as signalling an imminent ...

I dont want to be rude but the only equation you copied correctly is the productivity augmented Cobb-Douglas production function. Equation 2 is equation 2 from Ottaviano, Peri (2008) (on page 8) it ...

A great up to date treatment that I keep coming back to is Ramey (2016). It discusses identification in both articles you refer to. The short answer to your question is that obtaining structural ...

As we have discussed in the comments, the utility function used in the book is Cobb-Douglas: $U = CM^{\mu}A^{1 - \mu}$. The well known fact mentioned in equation (3.3) on page 57 - the one that you ...

I wouldn't say Nash equilibrium is broader than Pareto-efficiency I'd say its different. As all know the sole Nash equilibrium in the Prisoner's dilemma is not Pareto-efficient and the three Pareto-...

You don't provide much information. Here is what I see here. The theoretical background for the first case is the AS-AD model. The exact specification seems to be an A-type VAR. A positive aggregate ...

GDP is the total amount of domestically produced output in the referred period. If $C^H$ is the consumption of domesticly produced goods, $C^F$ is the cosumption of goods produced abroad, $G^H$ is the ...

Based on the steady state your production function is Cobb-Douglas.Taking logs and derivatives wrt time of $Y$, $\frac{Y}{L}$ and $\frac{Y}{AL}$ in the steady state yields the desired result: $K$ ...

If you watch closely, you will find out that the slope of the lines is -1. I.e. the values of y along every one of the lines are exactly equal. That is you get this lines only because you have great ...

An EME's government collects taxes in domestic currency. If it issues debt in foreign currency and the domestic currency depreciates, the value of foreign currency-denominated debt increases. For ...

Without the cooperation of at least mid-level management I dont think that such an approach can work even in theory. Management sets the quantity of ressources and intermediate goods the striking ...

You need to come up with good instruments. I.e. what affects worldwide price directly and affects domestic output only through the price? What affects domestic output directly and affects worldwide ...

I don't think that the issue is stationarity. In the original paper Uhlig uses logs of integrated variables like the CPI without transforming them further or including a time trend. From looking at ...

The terms "ordered last" or "ordered first" do not necessarily relate to the place of the variable in the $y_t$ vector. Rather they describe the column (row) vector of the ...

income is total profit plus wage income, and the two are fixed in proportions I.e. $y_t = w_t + \pi_t$ and $w_t = \alpha y_t$ and $\pi_t = (1-\alpha)y_t$, where $\alpha$ and $(1-\alpha)$ are the ...

Your computations are OK, but this is a trick question The total quantity set by the colluding firms and the quantity chosen by a monopolist are not the same in this question. By setting $MR = MC$ ...

Leaving aside the cases of platform markets and other externalities and natural monopolies, what people who have no training in economics usually miss is question of the size of the market. It may ...

By recursive substitution you obtain $y_t = \sum_{j=0}^t e_{t-j}.$ Thus $\forall p \in \mathbb{N} \hspace{.2cm} y_{t-p} = \sum_{j=0}^{t-p} e_{t-p-j}.$ Under the usual white noise assumption for the ...

Youre erring in the definition of Kaldor-Hicks efficiency. K-H improvement is a change where those who lose from the change, lose less than the gain obtained by those who benefit from it. Pareto ...

It is safe to assume that if the consumer passes away, his creditors get his endowment. This actually happens in real life. $B$ should obviously be zero. As far as the second period is concerned you ...

There is no steady state in the Solow framework. The system is explosive because $a,b >0 \wedge a+b<1 \Rightarrow a+b + (1-a) > 1$. Thus $(zK_t)^{a+b} (L_tz)^{1-a} = z^{1+b}(K_t)^{a+b} (L_t)^{... View answer Accepted answer 1 votes From a) we obtain$y - \hat{y}_x = M_xy = M_xu$and from b)$y - \hat{y}_z = M_zy = M_zX\beta + M_zu$, where$M_x$and$M_z\$ are the residual-maker matrices (the ones from the accepted answer of the ...