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1500 questions
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5 answers
Why does increasing the money supply decrease the interest rate in layman's terms?
If money supply increases, then I will have more money in my pocket to spend more. I imagine that prices will also increase over time to adjust to there being more money in circulation. Is it because that now, fewer people want to save because they…
dev_el
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Should selling price depend on product quality or on work to produce the product if both not in positive correlation?
I am a Natural Science student and read a little about economics. I am not sure this question is related to economics or not, decided to give it a try.
Recently, I am looking for printing service. From more than one service providers, I got the…
TheLearner
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What is the mechanism that triggers a stock price change?
When discussing with my son basic economics (how the price is driven by demand, among others), I came to wonder which exact mechanism triggers a price change in a stock exchange.
In everyday life, prices are fixed (in practical terms) by the…
WoJ
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8
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Continuous time optimization with two laws of motion (the Hamiltonian with two laws of motion)
How would we deal with a continuous time optimal control problem with two laws of motion? Suppose we have the following RCK like environment with human capital investment.
$$\max_{c(t),k(t),h(t)}\int_{t=0}^\infty e^{-\rho t} u(c(t)) dt$$
subject…
EconJohn
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3 answers
Identifying assumption meaning
I am hoping to get a good explanation regarding what is meant by an identifying assumption.
In many articles, under empirical strategy, authors state that:
we exploit firm level variation to identify the effect
we exploit industry level variation…
user508281
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8
votes
2 answers
Extensions of Nash equilibria to games with infinite strategies
In the Jehle and Reny textbook (which I should add I have not read much of beyond a few sections of interest), a theorem stating that there is always a (mixed) Nash equilibrium in finite strategic form games is proven. The book assumes that all…
user169
8
votes
2 answers
Alternatives to Pigouvian tax
Two common drawbacks of Pigouvian subsidy mentioned in the literature are related to monetisation and measurement of social cost (Baumol) and reciprocity of social cost (Coase).
What alternatives to Pigouvian taxes are proposed in the literature?…
Bravo
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8
votes
3 answers
What is the impact of fracking on oil prices?
I read an article about the recent fall of gas prices in the US claiming that the fall in gas prices was due to the expansion of fracking within the US. The article said that, over the past few months, the oil harvested from fracking had come onto…
Mathematician
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Are there any surveys of economists on the determinants of healthcare price increases in the US, particularly over several decades?
It was asked recently on politics SE what drove healthcare (actually healthcare insurance) prices in the US to rise faster than the CPI.
Neither of the top two answers resorted any actual econometric analysis, but both illustrate some popular…
the gods from engineering
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2 answers
Is there a way to link Berge's theorem of maximum to Envelope theorem?
Berge's theorem states
Let $X \in \mathbb R^m, \Theta \in \mathbb R^n $, $f : X \times \Theta \to \mathbb R$ be a jointly continuous function, $C : \Theta \rightrightarrows X$ be a continuous(both upper and lower hemicontinuous) compact-valued…
Epicurus
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Optimal consumption in Merton-like portfolio choice model with constant wage
My Questions
Consider the following problem. It is almost identical to
the classic Merton portfolio choice problem. Here I'm solving it using
the so-called Martingale method. I have provided my attempt at
a derivation. I have three questions:
Is…
jmbejara
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8
votes
2 answers
Consequences to lending and value of national currency from a negative interest rate and 140-year mortgages in Sweden
According to an article at Yahoo Finance, the Swedish central bank dropped its zero interest rate to -0.1 percent a couple of days ago (the article is dated to Thursday, February 12th, 2015).
Now, already in 2013 this article from Business Times…
user2957
8
votes
1 answer
Are there any other rational preference relations without utility function representations, besides Lexicographic?
It seems like lexicographic isn't that "special". Like yes it is special in that supposing it has a utility function gives you a bijection from the rationals to the reals, but I mean unique in some sense. I know that it satisfies a bunch of nice…
542goweast
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8
votes
2 answers
Common Knowledge and the Red Hats Puzzle
Here is a puzzle that is supposed to help illuminate common knowledge in game theory. Three girls are sitting in a circle, each wearing a red or white hat. Each can see the color of all hats except their own. Now suppose they are all wearing red…
user178543
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8
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2 answers
Why is overlapping generation model not a main model in macroeconomics?
It seems that overlapping generation model has far more realistic assumptions than ordinary Ramsey-Prescott RBC model for use in macroeconomics. Why is Ramsey-Prescott ones, even New Keynesian variants, are more popular than overlapping generation…
Mak
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