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1500 questions
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3 answers
Solution Method for Infinite-Horizon Maximization Problem
Full disclosure: this problem was part of a final exam that none of our class could really solve definitively. Below the general form is a specific utility function we worked with that I'll try to replicate my work for. Any help on the solution…
Kitsune Cavalry
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7
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Selecting the best utility function for households
I have little to no background in micro, but I'm learning about utility functions.
It seems that there are many forms of utility functions for households. In general terms, how does one go on to select a given functional form. Are there a class of…
StatsScared
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Mythbusters - Determine optimal boarding strategy based on time and satisfaction score
Most airlines board passengers starting from the back of the plane and then working their way towards the front (after boarding priority classes and passengers).
In an episode of Mythbusters, Adam and Jamie tested the myth that the boarding strategy…
BCLC
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2 answers
given someone's past investing history, is there a way to calculate his risk aversion?
given someone's past investing history, is there a way to calculate his risk aversion?
Say, we know this client's investment history for example his past return, is there a way to calculate his risk aversion and use this parameter to portfolio…
JOHN
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2 answers
How did Portugal draw down their interest rates on pubic debt?
I notice that Portugal had a very high interest rate on its national bond issues back in 2012 but since then it has drawn down significantly:
How were they able to decrease the interest rate?
Lassie Fair
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7
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2 answers
Code finding all stable matchings in one-to-one problem
Do you know of any publicly available code in python or R (or any other free high level language) that returns all the stable matchings for any one-to-one matching problem?
Note: This is related but different from Available code for computing…
Martin Van der Linden
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7
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4 answers
Why is Uber worth almost as much as Boeing?
At $68 billion, Uber has a higher valuation than GM, Ford, and Honda.
According to Microaxis, Boeing is currently valued at around $87 billion.
Why is Uber worth so much? I would think that judging the value of companies would be similar to…
spacetyper
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7
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2 answers
Using another person's guess as an IV
In Estimates of the Economic Return to Schooling from a New Sample of Twins by Orley Ashenfelter and Alan Krueger, they correct sampling error with an IV. They claim that their results imply a larger effect of education on earnings than what was…
user4207
7
votes
1 answer
Is China at the golden savings rate s? If so, what is it?
Consider Solow growth model. Let $s$ denote savings rate.
Suppose we estimate China invests 40% of it GDP rather than consuming. Assuming China is dynamically inefficient because they are a developing nation, how can I estimate what it's $s_{gold}$…
Stan Shunpike
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7
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2 answers
Optimal Random Bids
This question comes from this website that I peruse often.
Two players go on a hot new game show called “Higher Number Wins.” The two go into separate booths, and each presses a button, and a random number between zero and one appears on a screen.…
Kitsune Cavalry
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7
votes
2 answers
The Frisch-Waugh-Lovell Theorem: an exercise
I have an equation of the form(all vectors): $y=X_1\beta_1+X_2\beta_2+u$.
I'm interested in knowing if the beta OLS estimators and respective residual for this equation are the same as for when we apply OLS to the following…
An old man in the sea.
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7
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1 answer
Implications of declining money velocity
In the United States, the velocity of both the M1 and M2 money supplies has been declining for over a decade.
The decline in the velocity of M1 could be explained by the shift away from cash to cards and online payments.
What are the causes and…
Comptonburger
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7
votes
5 answers
Problems with economic modelling: good textbooks/articles/papers?
I am interested in the problems that may arise when one models economical phenomena using mathematics and indeed also the nature of these models. Are there some good and easily accessible textbooks, articles, papers or other literature out there…
Ladoor
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7
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2 answers
Elasticity of demand equals -1 but income decreases!
In my textbook, it's stated that:
When $\epsilon < -1$, demand is elastic and raising price will result in smaller income, while lowering price will result in bigger income.
When $\epsilon = -1$, demand is neither elastic nor inelastic and change…
Valentine Bond
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7
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3 answers
Convexity of the Market Demand Function
The market demand function can be either concave or convex. I am looking for conditions under which a general market demand function can be considered convex.
For example would convex preferences or a concave utility function imply a convex market…
BB King
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