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1500 questions
7
votes
1 answer
White versus Newey-West standard errors
could you please help me to understand when I should use either white or newey-west standard erros?
I do work with time-series data. I look at both contemporaneous and intertemporal realtionships.
My understanding is that NW s.e. are appropriate…
frame
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7
votes
2 answers
CES production function estimation
Introduction
There are different ways of estimating the parameters of a production function. For example, single-equation and system equation techniques are both possible. Another difference among methods is that estimable forms may either involve…
Graeme Walsh
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7
votes
4 answers
Do capitalists in the Marxism world view create value?
As I understand it, capital is created through the surplus value, that is the difference between the value of a worker's work (i.e. the wage that he is paid) and the new value that is created through his work. A simplified example would be…
Marcus Thyssen
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7
votes
3 answers
Can there be too little unemployment for the health of the economy?
The cyclical rate of unemployment can be negative, which implies that the business cycle sometimes produces too little unemployment. How can there be “too little” unemployment for the health of the economy?
user7163
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7
votes
2 answers
Why lower the deposit rate if it is already negative?
The European Central Bank (ECB) has been lowering the interest rate on its deposit facility, first to -0.1% in June 2014, then to -0.2% in September and eventually to -0.3% in December 2015.
But what difference does it make whether it is -0.1% or…
proskor
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7
votes
1 answer
Economies of Scale vs Learning Curve
Is there a difference between the meanings of the terms "economies of scale" and "learning curve"?
The term "learning curve" is being used by cost estimators and refers (more or less) to the idea that businesses will have a higher cost per item if…
Mathematician
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7
votes
2 answers
Best instruments for "years of schooling"/"education"
As an answer to question “Seminal papers that later were proven to contain errors”, @snoram mentioned Angrist and Krueger (1991), and there use of quarter of birth as an (exogenous) instrument for education.
@snoram illustrates using (Buckles and…
Martin Van der Linden
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7
votes
2 answers
Are many of the traditionally oil dependent Gulf states really successfully diversifying their economies?
I've often heard the claim that many Persian Gulf states are successfully diversifying their economies away from oil (e.g. non-oil share of UAE's GDP is 71% and in Saudi Arabia, non-petroleum sectors account for 55% of GDP).
The IMF has the 2015…
Esteemator
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6
votes
1 answer
Difference between Sequential and Weak Sequential (Weak Perfect Bayesian) Equilibria?
This is in reference to the Game theoretic concepts as Nash equilibrium refinements. Sequential equilibrium are often defined as satisfying two conditions: consistency and sequential rationality. Whereas Weak Sequential Equilibria (sometimes…
user6733
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6
votes
1 answer
Is there any economic meaning to log returns?
I recently had a discussion with a friend regarding log returns and any economic meaning that could have as a measure in the sense of "assessing the benefit received for compensating work done in a previous time period."
He rather suggested that…
user6731
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6
votes
1 answer
Minimum wage vs wage subsdies
Many politicians argue that the minimum wage is essential for providing an sufficient standard of living to all. However, there are many issues binding price floors predicted by standard supply and demand theory. Why couldn't wage subsidies be used…
Halbort
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6
votes
1 answer
Apply Ito's Lemma to exponential martingale
$\newcommand{\dd}{\, \mathrm{d}}$
Consider the exponential martingale,
$$
\xi_t^\lambda = \exp \left\{ - \int_0^t \lambda_s \dd z_s - \frac 12 \int_0^T \lambda_s^2 \dd s \right\},
$$
that is used in the statement of Girsanov's theorem (this…
jmbejara
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6
votes
1 answer
Textbook covering calculus and probability theory
Is anyone able to recommend a textbook that covers the following topics at a level suitable for econ undergraduates?
Differential calculus, including the various rules of differentiation and partial derivatives.
At least some integral…
Ubiquitous
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6
votes
1 answer
Objections to total surplus as tool for welfare measurement
I think people would agree that the most common tool for welfare measurements in economics is the notion of total surplus.
Throughout it's history, total surplus has been criticized several times and on different grounds. This post aims at being a…
Martin Van der Linden
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6
votes
2 answers
Calculate the elasticity of substitution of Epstein-Zin preferences
$$
\newcommand{\E}{\mathbb{E}}
$$
Let a consumption
sequence be given $C=(C_0, C_1,...)$ and let
$C_t^+ = (C_t, C_{t+1}, ...)$.
Now, suppose I have Epstein-Zin preferences,
\begin{align*}
U_t(C_t^+) &= f(C_t, q(U_{t+1}(C_{t+1}^+))) \\
U_t &= \left…
jmbejara
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