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1500 questions
16
votes
3 answers
What is the difference between intensive margin and extensive margin in labor economics?
What is the difference between intensive margin and extensive margin in labor economics, or general RBC model, where we talk about labor-hours supplied changing with extensive margin or intensive margin?
Newark
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16
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5 answers
Topological concepts in economic theory
QUESTION: What are the major or systematic applications of post-1960s mathematics to microeconomics?
For example, in the late 19th century, Fisher first used the mathematical ideas of Gibbs to construct modern utility theory. In the 20th century,…
user218
16
votes
10 answers
Car prices haven't changed in 20 years, no inflation?
I notice that there seems to be little or no change in car prices over the last 20 years and they seem to be unaffected by inflation.
For example, a Toyota Camry sold for about \$23,000 +/- \$2,000 (MSRP) around 1999-2000, and currently it sells for…
Lassie Fair
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16
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1 answer
How could the economic cost of the world not speaking the same language be estimated?
While languages are fun and add color and flair to cultures and make the world a more interesting place, they also have a cost. Beyond the monetary costs of translation/editing/proofreading, interpretation, multi-language signage and so on, there…
Dan Dascalescu
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16
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3 answers
Why is money in circulation a liability of the central bank?
We know that the money today is fiat currency, that it is money because the government says it's so. So when new money is printed or loaned out to the commercial banks by buying treasury bonds, government does not technically "owe" any thing. The…
Kiran Yallabandi
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16
votes
1 answer
When a country adopts the Euro, what happens to its debt?
When a country, say Greece, adopted the Euro as its currency, what happened to the debt that was based on the Drachma? Was it converted into Euros?
Steve
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16
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5 answers
When a stock market crashes, how does money just disappear?
I looked it up online (here), but I find it hard to believe that money literally "disappears". For example, if I buy 10 stocks of a toaster company for \$100 per share, and then the stock value drops to \$10, I've lost \$900, but the entities I…
Sigiward Larsson
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15
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0 answers
How do I compute the relative risk aversion of Epstein-Zin preferences?
$$
\newcommand{\E}{\mathbb{E}}
$$
Preface
This question is related to this one about the elasticity of intertemporal substitution and this one about the definition of absolute risk aversion. (It's related to the second one insofar as the definition…
jmbejara
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15
votes
3 answers
Are monotonic and continuous preferences necessarily rational?
Let $\succsim$ be a strictly monotonic and continuous preference relation, and let $X=\mathbb{R}^{n}$ be the consumption set.
Is rationality of $\succsim$ implied by these conditions?
I think transitivity is implied by continuity. However,…
möbius
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15
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1 answer
Stochastic growth in continuous time
Literature: See Chang (1988) for theoretical part and Achdou et
al. (2015) for numerical part respectively.
Model
Consider the following stochastic optimal growth problem in per capita notation.
\begin{align}
&\max_{c}\int^\infty_0 e^{-\rho…
clueless
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15
votes
3 answers
Are there theories that invalidate the "tragedy of the commons"?
Wikipedia states:
The tragedy of the commons is an economics theory by Garrett Hardin, according to which individuals, acting independently and rationally according to each one's self-interest, behave contrary to the whole group's long-term best…
user116
15
votes
12 answers
If I gain, then someone else loses. Correct?
On a very small scale, it's certainly true that if I gain, somebody else might lose. If I take away my brother's chocolate, then he will lose it, and will most probably not get anything comparable.
But on greater scale, say, nationally, if one…
Manuel Maly
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15
votes
8 answers
Why are banks providing mortgages?
Currently I'm learning about finance and I want to understand the following. In the Netherlands the interest on a mortgage is about 3%-4% depending on the payback period. When learning about stocks and ETF, I learned that the average market return…
Tim
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15
votes
2 answers
How much do second-hand good purchases affect first-hand demand?
For the purpose of this question, I'm only interested in relatively cheap goods (clothing, appliances, furniture, phones), not extremely substantial purchases like cars or houses.
Proceeding from rational choice theory, it seems that the existence…
H Huang
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15
votes
2 answers
How is price elasticity determined in practice?
Price elasticity of demand and Price elasticity of supply are two of the most important concepts of microeconomics, but they're generally explained from a hypothetical standpoint, and little effort is given to explaining how they are measured, or…
Jason Nichols
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