Economics Stack Exchange
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1500 questions
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2 answers

Available code for computing solutions to matching algorithms?

The question of designing matching procedure (between high-schools and students, med intern and hospitals, kidney donors and receivers,...) has been widely studied by economists and vastly contributed to Roth and Shapley receiving the Nobel memorial…
Martin Van der Linden
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3 answers

Log-linearization of Euler equation with an expectation term

There are a few online resources available to help with log-linearization (e.g., here or here). However, log-linearization where an expectation is involved is a little tricky because the log can't simply "pass through" the expectation…
ethan1410
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5 answers

Does the Federal Reserve buy and sell stocks?

Can the Fed buy and sell stock in publicly traded companies? Is there evidence of this and, wouldn't this behavior drive the price as opposed to actual market forces?
dnbwise
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Rosen's Diagonal Strict Concavity condition

Consider a game with $n$ players, with strategy space $S \subset \mathbb{R}$, where $S$ is bounded set, and player's $i$ payoff function $\pi_i:S^n \rightarrow \mathbb{R}$. Rosen's condition (J. B. Rosen. Existence and uniqueness of equilibrium…
Nidjsi
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What is the difference between contract theory and mechanism design?

Can someone explain the difference between contract theory and mechanism design?
user7562
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1 answer

First Order Condition for Profit Maximization in Gambling Industry

I am working on a model of optimal payout percentages in the gambling industry. Because the nominal price of a \$1 ticket is always \$1, we use an effective price strategy where Q = \$1 in won prizes. If a game pays out 50%, the effective price…
datahappy
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1 answer

Barro's (2009) rare disaster model in the AER: How to derive equation (10)?

In Barro (2009) Rare disasters, asset prices and welfare costs Barro develops a Lucas tree model with Epstein-Zin preferences. My question concerns the paper's equation (10). In this equation Barro states that under the optimal solution utility…
drcms02
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Differentiate a positive externality and the absence of a negative externality. Tax or subsidize?

I hope this isn't overly semantic, but I'd like to gain some clarification on the use positive (or negative) externality. I usually shoot down suggestions for examples of positive externalities like organic agriculture. We can grant that organic…
Pburg
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Is there a solution to the Joker's game in The Dark Knight?

In the final battle in the movie, the Dark Knight (2008), the Joker has rigged two ferries carrying people out of Manhattan Gotham to explode. One ferry carries mostly civilians with a substantial National Guard presence. The other ferry contains…
Batman
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Modern theory of integrability of demand?

I am aware of Hurwickz Uzawa work in integability, neatly summarized by Border http://people.hss.caltech.edu/~kcb/Notes/Demand4-Integrability.pdf I am wondering if there is any modern treatment of the subject, for instance a version in Sobolev…
user157623
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Is an "arms race" between wages and inflation inevitable?

If an employer were to ensure wages kept parity with or outpaced inflation, there's an argument that this would cause runaway inflation. That is, employees would have more capital to play with, so the cost of goods and services would increase to…
Xophmeister
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Uses of convex analysis in Economics

I'm taking kind of a crash-course in convex analysis to complement my mathematical skills and was wondering if anyone knew about nice ways in which this kind of tools were used in Economics. To be more precise, some of the things I've seen so far…
BVJ
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8 answers

Understanding the "But they will lose jobs!" argument

Suppose there is some industry whose profit is based on unethical business practices. Eg: A pest control company X, who themselves send pests into people's houses, so as to later earn money from offering services. The business runs great due to weak…
tryst with freedom
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2 answers

What is a substitute/complement in terms of mixed partial derivatives?

I am trying to understand how substitutability relates to mixed partial derivatives. I thought the change in marginal utility with respect to a change in the amount of $x$ would correspond to $$\frac{\partial U}{\partial x}$$ so I got confused when…
Stan Shunpike
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4 answers

R in econ departments?

According to my personal observation the majority of (prominent) economists prefer use Stata for their statistical analysis and Matlab for other mathematical work. SAS and Excel are also used (especially in finance). In my opinion R is a much…
snoram
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