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1500 questions
6
votes
3 answers
Why was Modigliani-Miller so relevant and innovative when it came out?
The Modigliani-Miller theorem*, a foundation of modern corporate finance, basically states that, in a no-frictions world, two identical firms have the same enterprise value, regardless of their financial structure.
Given a firm A, whose liabilities…
Gian Segato
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1 answer
System of Differential Equations- Asymmetric First-Price Auction
I am working on a problem in my Auction Theory textbook regarding a two-player asymmetric first price auction. Assume the bidders are risk neutral. The problem statement is as follows:
Suppose that bidder $1$'s value $X_{1}$ is distributed…
ml0105
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6
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1 answer
Are there any studies that show that "Affirmative Action" hurts the economy?
Are there any studies that show that "Affirmative Action" (an action or policy favoring those who tend to suffer from discrimination, especially in relation to employment or education) hurts the economy?
Based on personal research/reasoning, I…
Mathematician
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6
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4 answers
Government bonds and printing money
Wikipedia: If a central bank purchases a government security, such as a bond or treasury bill, it increases the money supply, in effect creating money.
My question is: what is the difference between this (government issues bonds and the central bank…
Joe Jobs
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6
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3 answers
How to deal with a singular Leontiev inverted matrix?
I am currently studying and experimenting the input-output methodology. It is a 1930's method based on national accountings that allows to measure the interindustry flow of good and services.
Currently, I am experimenting it on the french economy.…
Kataplexy
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6
votes
1 answer
Geographic mobility of workers within Germany, as compared to within the US?
Martin Feldstein (1997, p. 36) claims that workers within the US are more geographically mobile than say within Germany. I had known that US workers were mobile. But one sentence of his seems a bit hyperbolic:
While Americans don't hesitate to move…
user18
6
votes
2 answers
Multiple equilibria: which one to select?
There are two agents $i=1,2$. Consider the following programm
\begin{align}
&V_1(x_0) := \max_u \int^\infty_0 e^{-\rho t}F_1(x(t),u(t),v(t))dt\\
&V_2(x_0) := \max_v \int^\infty_0 e^{-\rho t}F_2(x(t),u(t),v(t))dt\\
s.t.~&\dot…
clueless
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6
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1 answer
What is was the total corporate Income earned in the United States in 2014?
What is was the total corporate income earned in the United States in 2014?
The question may seem simple, but I have been looking for a reliable source to inform me of this figure, and I hope someone out there can help me find a reliable figure…
Danny Alexander
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6
votes
3 answers
Why is the Euro a bad idea compared to other currencies?
Many economists, including Nobel laureates Paul Krugman and Joseph Stiglitz, have said that the Euro was a bad idea from the beginning and is a major reason for all the current economic problems. My general understanding of this issue is that…
cspirou
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6
votes
1 answer
How does US (its economy, banks, industry) profit from dollar being the "standard currency"?
How does US (its economy, banks, industry, "finance industry") profit from dollar being the "standard currency"? I am not seeking "ideological" explanations, but explanations of the mechanisms involved, of the kind of "how things work", better…
John Donn
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6
votes
1 answer
Hausman Test for Simultaneous Equations
Given a set of structural equations:
Demand Function: $$Q_1 = \alpha_0 + \alpha_1 P_t + \alpha_2 I_t + \alpha_3 R_t + \mu_{1, t}$$
Supply Function: $$Q = \beta_0 + \beta_1 P_t + \mu_{2, t}$$
Where
$P$ = price
$Q$ = quantity
$I$ = income
$R$ =…
Christopher
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6
votes
3 answers
Applied Chaos to Economics
Just a question to satisfy my Mathematical itch, but is there anything in Economics that uses Chaos Theory from Math?
user4973
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6
votes
1 answer
Why is VAR analysis all linear? Why not nonlinear?
When doing VAR analysis, it is almost always a linear form that gets used. Is there any justifying reason (most DSGE models are non-linear unless linearized) to use a linear form?
GADAN
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6
votes
3 answers
Fractional reserve banking and the value of someone else's currency
Suppose there are two countries: $A$ and $B$. $A$ is a large, stable, democratic country with its own currency, the dollar. $B$ does not have its own currency. All prices and financial transactions in $B$ use the dollar and $B$'s citizens have a…
Ubiquitous
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6
votes
2 answers
If Greece defaults, can it still stay with the euro?
Should Greece default, a forced conversion from euros to drachmas will be a further catastrophe to Greek economy as the drachma will quickly collapse. However, if Greece leaves the Eurozone, but keeps the Euro as a national currency (at least for a…
Alek Andreev