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1500 questions
8
votes
3 answers
Can a closed economy flourish?
I was wondering if it is possible to run a country based only on domestic economy and not to enter the world economy. Basically, if certain economy of a certain country fails and poses threat to world economy, can other countries seal off their…
user8734
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8
votes
1 answer
A market correction for an industry which has had long-run negative externalities
Take a market where there have been long-run negative externalities. That is to say, the negative externalities have been in place long enough to have played a part in the investment decisions for all extant fixed capital.
Capital costs are a…
410 gone
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8
votes
5 answers
Why do currencies cover orders of magnitude?
Using 1 USD as a reference, most currencies are within an order of 5 away from the USD: that is, one unit of most currencies is worth between 0.2 USD and 5 USD. (Source.) In fact, most European currencies (Pound, Euro, Franc) are almost exactly 1…
user01101001
8
votes
2 answers
Why does slowly decaying ACF indicate that a time series is non-stationary?
I am a student studying time series econometric online and looking for help talking around some of the principles. There is one point I am trying to understand better.
I've come across some literature online which talks about how non-stationary data…
Adrian_P
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8
votes
2 answers
The Printing of Money for Paying Debt
I know that printing money causes inflation, but what if we print it to pay back our debts?
For example, we have N dollars of debt to China. We can just print the N dollars and give it to China.
This way, we would not have more money in our country…
MehranJ
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8
votes
2 answers
How to auction shared item with a roommate?
My roommate and I split the cost of a game console a year ago (~$400) but he is now moving out.
We were wondering how to fairly auction the console given the situation:
We both paid an equal price of $200+
Right now half the market price of the…
ma22
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8
votes
1 answer
On the Ms. Exponential vs Ms. Hyperbolic vignette
I've come across this little parable purporting to show why exponential discounting is superior to hyperbolic discounting1:
The greater bowing [of the hyperbolic discount curve] means that if a hyperbolic discounter engaged in trade with someone…
kjo
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8
votes
0 answers
Why aren't there more super-stars in educational content delivery?
The super-star phenomena seems to happen in any field where the marginal cost of distribution is very low. I think teaching could be that way just as much as acting or playing basketball - at least as far as educational content delivery. And many…
user4207
8
votes
1 answer
How to show that GLS estimator is consistent in regression model?
$$\mathbf Y=\mathbf X\beta + \mathbf U$$
$$\mathbf E[\mathbf U\mathbf U']=\Omega $$
$$\hat \beta - \beta=(\mathbf X'\Omega^{-1}\mathbf X)^{-1}\mathbf X'\Omega^{-1}\mathbf U$$
let $\mathbf X^{*}=\Omega^{-0.5}\mathbf X$, and $\mathbf…
Edward
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8
votes
1 answer
LEN-Model equivalency
Starting position is a principal-agent-model with incomplete information (moral hazard) and the following properties:
Agent utility: $u(z)=-e^{(-r_az)}$
Principal utility: $B(z)=-e^{(-r_pz)}$
Effort levels $e\in \Bbb R $
Outcomes $x\in \Bbb R,…
Fusscreme
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8
votes
1 answer
Overlaping jurisdictions model, Alesina Spolaore: Proof of Lemma 1; The Size of Nations
I've been reading the book 'The Size of Nations' by Alberto Alesina and Enrico Spolaore (can be found on the net if you know where to look) and I'm having trouble following their "proof" of the first lemma for the overlapping jurisdictions model.…
doge
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8
votes
4 answers
What institutions are examples of "shadow banking"?
I often hear the term shadow banking tossed around when discussing the United States and Chinese economies. What exactly is shadow banking and could you give examples of some specific companies that act as "shadow banks"? I have been told that in…
cpage
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8
votes
3 answers
To what extent are renewables like solar driving down the cost of oil?
The price of oil has declined by roughly 66% in the past couple of years, and a lot of people want to know why:
Some people are saying that the recent trend of oil prices dropping means the global economy is consuming less oil and therefore…
boulder_ruby
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8
votes
3 answers
What does it mean to make an identification assumption?
Trying to understand this problem:
Suppose you had access to a dataset that follows individuals from
adolescence throughout adulthood. Each year, you observe earnings,
educational attainment, health, and marital status. Suppose you were
…
user4207
8
votes
3 answers
What does Varoufakis mean by 'banks can make up money' in 'Talking to my daughter about the economy'?
Varoufakis' book contains some arguments and explanations. I don't have the book in English with me, so this is a 'free translation' of a couple of points (bold is mine):
"Contrary to the entrepeneur, the banker does not organize production. (...)…
johndoe
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