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1500 questions
5
votes
2 answers
Why does the Fed control interest rates?
The Fed more or less controls interest rates using open market operations, but why?
Why are interests rate not controlled by supply and demand?
cph2117
5
votes
1 answer
Evidence that open source production processes increase efficiency and/or consumer surplus?
Is there peer reviewed evidence that open source production processes increase efficiency and/or consumer surplus? It seems that the first theorem of welfare economics requires complete markets which requires that all actors have perfect…
jtd
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5
votes
2 answers
Estimating price elasticity of demand
I have 25 quarterly observations and I want to estimate price elasticity of demand. I intented to use GMM-IV estimator. However, I read that it is not good for small samples. What can you suggest me? Please keep in mind that I am not econometrician…
Quirik
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5
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6 answers
Create simple graphs without functional forms
I am looking for a suggestion of programs that can be used to illustrate effects like the income/substitution effect with regards to the consumption choice etc.
With many programs, need you to specify functional forms, but if you are just…
jkrod
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5
votes
1 answer
Demand curve from logit model
Is it possible to derive a demand curve from a discrete choice multinomial model. For instance, a logit model would give the probability of purchasing each good. But can I translate that into a demand curve.
Yan Song
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5
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2 answers
What would happen if stock markets were open 24 hours?
Suppose you are a broker or a trader, and the stock markets will be open 24 hours a day.
What would be the implication for you as a broker in this scenario?
I mean:
How will your strategies change?
Will it be more difficult or easier to…
eli.rodriguez
- 153
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5
votes
2 answers
Intuition of the Kolmogorov Equations
So I understand the derivation of the Kolmogorov Forward and Backward Equations, but I don't quite understand the intuition. Here is from Stokey, 2008:
"The backward equation involves time $t$ and the initial condition $x$, with
the current state…
pdevar
- 163
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5
votes
1 answer
A country borrowing from the rest of the world
Well I'm having a some difficulty in understanding completely what the following sentence means and I would like to be sure.
«(...) a country running a trade deficit is buying more from the rest of the world than it is selling to the rest of the…
An old man in the sea.
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5
votes
1 answer
Why are pricing charts treated as continuous series?
I understand that prices are set by actors' offers to buy and sell within the market, however, when analyzing the data it seems to often be treated as though the price is continuously varying like some natural process that is independent of the…
Luke
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5
votes
2 answers
Is a strong foundation in advanced microeconomic theory essential to study environmental economics at the graduate level?
Advanced theory of individual economic behaviour in production, consumption, and general equilibrium. Are these topics useful to study environmental economics a the graduate level, or is there not a lot of overlap?
Hexatonic
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5
votes
2 answers
Two-player first-price auction with resale
Exercise 2.5 in Vijay Krishna's Auction Theory (slightly modified):
Consider a two-bidder first-price auction in which bidders’ values
are distributed according to $F$. Let $\beta$ be the symmetric equilibrium, i.e., $$\beta(x)=E[Y\mid Y
Alexi
- 191
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5
votes
2 answers
In a hyper-inflated economy, how do vendors know how much to raise their prices?
You regularly see stories about hyper-inflated economies. The common feature is that as prices spiral out of control, stores continually raise their prices to match the level of inflation, leading to insane costs for basic items and with note-values…
Richard
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5
votes
2 answers
Monetary policy takes medium run time to take effect. Why study it in short run?
Well I'm reading a book on the IS-LM model.
At the end of the chapter, page 125 in my edition, the author presents one paper showing some graphs where the monetary policy (monetary contraction - increasing 1% of the federal funds rate) influencing…
An old man in the sea.
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5
votes
3 answers
Preferences where wealth effect dominates
King-Plosser-Rebelo preferences satisfy balanced growth requirements, we have that income and substitution effects of labor cancel. Labor does not respond to a change in the wage level.
Greenwood-Hercowitz-Huffman preferences shut off the wealth…
FooBar
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5
votes
4 answers
Relationship between Real Interest Rate and Employment
The country of Kingsland is considering the introduction of a
compulsory retirement saving scheme. Under this scheme all workers are
required to save ten per cent of their annual wages and salaries until
they retire. Use the supply and demand…
GaramMasala
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