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1500 questions
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votes
2 answers
Calibration of utility function parameters controlling labor disutility
Consider the very basic utility function
$$ u(c, n) = \log (c) - \alpha \frac{n^{1 + \frac{1}{\nu}}}{1 + \frac{1}{\nu}}$$
Where $c$ is consumption and $n$ is working hours. As the Frisch elasticity here is given by $\nu$, I would calibrate $\nu$ to…
FooBar
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7
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How to verify Value Function in nonzero sum two player Differential Game?
There are two agents $i=1,2$. The state $k$ is governed by $\tau_i\in[0,1]$ where
\begin{align}
\dot{k} = f(k,\tau_1,\tau_2).
\end{align}
Define the value function of player $i$ by
\begin{align}
v_i(k) := \sup_{\tau_i}\int^\infty_0{e^{-\rho…
clueless
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7
votes
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P-value hacking
P-value hacking is the "art" of looking at different outcomes and specifications until you get a "false positive", i.e. a p value under, say, 0.05, which only noise and not true under the data generating process.
Say I have a treated group with size…
FooBar
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7
votes
2 answers
Why did large denomiations exist in the early 20th century?
In the early 1900s, you could buy a newspaper for 5 cents, a pound of apples for 10 cents and the average salary was about \$40 a month.
Nowadays, an issue of the NYT costs \$2.50 , a pound of apples can cost \$1.15 per pound and the median monthly…
Alex
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7
votes
1 answer
Portion of Derivation of F-test
In Greene's Econometric Analysis there is a derivation regarding the F stat. The setup is a null hypothesis of the form: $H_0: R\beta =q$ where $\beta$ is a $k\times 1$ vector of parameters, $R$ is a $J\times k$ matrix and $q$ is a $J\times 1$…
Michael Gmeiner
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7
votes
1 answer
How much impact does memory have on risk pricing?
Have studies been done that demonstrate the limits of human memory on reputation in the Iterated Prisoner's Dilemma?
i.e. at what point (on average) does a player start to "forget" the actions of a previous opponent?
Jason Nichols
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7
votes
1 answer
Benefits of a cartel among firms
Suppose I have $n>2$ firms selling differentiated products. These firms form a cartel for the price. The cartel has size $n_c$. Let $\pi_{i,m}$ be the payoff of a firm $i$ outside the cartel and $\pi_{j,c}$ be the payoff of a firm $j$ inside the…
Star
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7
votes
1 answer
How to assess whether inflation is "well understood"
I was told (correctly) that the ability to forecast something is not the same as understanding it. I was also told that inflation is pretty well understood by macroeconomists nowadays.
How do macroeconomists assess how good/accurate their…
Giskard
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7
votes
2 answers
What is an example application of a quasilinear utility function?
I am told a quasilinear utility function is a function like $$U(x,y) = \sqrt{x}+y$$
My Question:
Can someone provide a real world example of a quasilinear utility function?
Stan Shunpike
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7
votes
2 answers
Application of Poisson process in economic modelling
To understand the emergence of constitution, Myerson (2008) models a scernario that a political leader gathers supports from captains in order to defeat challengers whose arrival is modelled by a Poisson process.
I found using Poisson process seems…
Metta World Peace
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votes
1 answer
Estimating Price Elasticity from sales
I'm looking at data for an online shop with clothing items listed at different prices. I'd like to use this information to do some kind of profit maximization (i.e. I'd like to have some understanding of the impact on sales if I raise/lower price of…
ecksc
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7
votes
1 answer
Does illicit payments qualify as transaction costs?
In countries where corruption run deep to the point it is not considered illegal; can such payments be considered as transaction costs?
Omer K Rasheed
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7
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2 answers
Econometrics blogs (after Econometrics Beat has been closed)
I used to follow Dave Giles' blog called Econometrics Beat. I enjoyed it very much and learned tons from it. Unfortunately, the professor retired and closed the blog three years ago. I would like to continue learning things like the ones Prof. Giles…
Richard Hardy
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7
votes
2 answers
How does a cash deposit change the M1 measure of the money supply?
The question asks what is the immediate effect of the cash deposit on the M1 measure of money supply. The official answer is "There is no change in the M1 measure of the money supply. (Demand deposits increase by the same amount that cash holdings…
Kun
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7
votes
1 answer
Models for inflation prediction
I am looking for some statistical models that are accepted to best predict inflation rates. Anything that is more complicated than linear model will be appreciated. Or even recommend books that discuss inflation predictions.
I would also be…
Zee
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