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1500 questions
6
votes
1 answer
Can you use more than one instrumental variables in an Econometric model?
Can you use two instrumental variables $z_1$ and $z_2$ at the same time for $x_1$ and $x_2$, in the following regression model
$y=a+bx_1+cx_2+dX_{other}+e$, where
$y$ is the explained variable,
$x_1$ and $x_2$ are two variables of interest that you…
Max Shang
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6
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2 answers
Any major theory/model that considers return due to idiosyncratic risk?
Are there any classical, major theories/models that consider positive return due to idiosyncratic risk? For example, CAPM only considers return due to systemic risk but not idiosyncratic risk. If there are no major theories/models that fit the…
Richard Hardy
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6
votes
1 answer
Showing that a transformation is measure preserving
Note: This question is related to this question about the construction of stochastic processes. Specifically, it relates to the transformation $\mathbb S: \Omega \rightarrow \Omega$ that is mentioned. The following is an example to help understand…
jmbejara
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6
votes
2 answers
Comparative dynamics in forward-looking equation
I have set up and solved an optimization problem with time $t$ endogenous state variables, $\alpha_t$ and $\beta_t$ and choice variable $s_t$. After some manipulation, the first-order condition for $s_t$ is of the…
John
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6
votes
1 answer
How is labor disutility modeled in Arrow-Debreu model?
In DSGE models, utility function contains labor disutility components. But I cannot not see how labor disutility is incorporated in Arrow-Debreu-Mackenzie model.
Fropants
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6
votes
1 answer
Are symmetric equilibria continuous with respect to the payoff matrix?
Assume a two player symmetric game where the payoff for the row player is given by:
$$
A = \left( \begin{array}{cc}
a_{1,1} & a_{1,2} &\cdots & a_{1,n}\\
a_{2,1} & a_{2,2} &\cdots & a_{2,n} \\
\vdots & \vdots & \ddots &…
R B
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6
votes
2 answers
What is the difference between a loan and an investment?
IMF, WB, ADB, IDB, AIIB are known to give loans. On the other hand, China is said to be investing in Pakistani project termed as CPEC.
What is the difference between these two terms in these two particular cases?
user13954
6
votes
1 answer
why is labor $h_t$ often average working time percentage of non-sleeping time in RBC?
Cobb-Douglas production is often given by $Y=AK^{\alpha}L^{1-\alpha}$, and $L$ is often just labor. But in RBC model, I notice that labor $h_t$ is restricted to $[0,1]$, and interpreted as working-time perecentage of non-sleeping time. Is this…
Hitman
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6
votes
2 answers
Why does the Laffer curve for consumption have no peak?
According to Trabant and Uhlig (2009), the Laffer curve for consumption has no peak.
As far as I can make out, the argument is based on the fact that money extracted by taxing consumption ends up back with consumers and then gets taxed again.…
GS - Apologise to Monica
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6
votes
3 answers
Unexplained economic puzzles?
Science is full of apparent puzzles and paradoxes, some of which still remain unexplained. Economics is not an exception.
It would be interesting to get a list of unresolved puzzles in Economics. By unresolved I mean there is a considerable…
luchonacho
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6
votes
2 answers
Arrow of time and irreversibility in Economics
In physics there is the concept of arrow of time, which states that time only evolves in one direction (forward), and that this should be visible in the material world. As the Wikipedia article states (emphasis mine):
Physical processes at the…
luchonacho
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6
votes
1 answer
Solving Leeper (1991) model
I am attempting to solve a variation of Leeper's (1991) model, which deals with the FTPL. This is what I have done so far:
The utility function is $\log(c_t)+\delta\log(M_t/p_t)$.
I obtain two first order conditions:
(1) $\frac{1}{R_t}=β E_t…
sageofspades
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6
votes
3 answers
How does inflation impact the welfare of the economy?
When the government causes inflation through printing money, the individuals who saved their money in the bank are poorer.
Is there a way to determine how different inflation rates impact the welfare of the economy?
I tried answering this question…
Mathematician
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6
votes
4 answers
Can a country survive and prosper without international trade or investment from overseas?
To what extent can a country be 100% independent from the rest of the world? Is there any country like that in the world? Maybe North Korea, but North Korea receives supports from China.
Tom
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6
votes
2 answers
Measuring macroeconomic variables more frequently
What would be the costs and benefits of collecting and releasing macroeconomic data, say, monthly instead of quarterly, or weekly instead of monthly? And what are the barriers to doing so?
sirallen
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