texts: Why are the 10 year German bunds and 10 year US treasury yield highly correlated?

texts: And when the ECB started QE this year, the 10 year bunds rate naturally plummetted, but so did the 10 year US treasury rate. What fundamental reason could cause the US rate to drop in synchrony?


texts: Precautionary Savings Two-Period model with a second period quadratic utility function

texts:
So preferences are defined as $u(c_0)+Ev(c_1)$

Both utility functions are strictly increasing, concave, and twice differentiable.

I understand in the setting of $u(c_0)+Eu(c_1)$ when $u(c_0)$ is quadratic that it will induce no precautionary savings. (that is the two periods share the same functional form)

However, my problem is that the explicit function of $u(c_0)$ is not given in my case, only that $v(c_1)$ is quadratic.

How do I assess the first period utility function?


texts: Karush-Kuhn-Tucker in infinite dimension

texts:
Does the Karush-Kuhn-Tucker theorem on sufficient conditions for optimality of a convex program apply in countable dimension?

For precisions, see Definition 4.1.1 and Theorem 4.1.4 of this course. Does the theorem extend to an infinite (but discrete) number of variables and associated constraints? If so, do you have a reference?


texts: Cross-section experiment with Differences-in-Diffrences estimation

texts:
I am trying to answer the following question related to econometrics:
We have a sample consisting of a cross-section of individuals in 2016 plus another cross-section of different individuals in 2018. We believe that, in 2017, a natural experiment took place affecting individuals of a particular type (the ‘treatment group’) and not affecting individuals of other types (the ‘control group’). Both types were present in our two samples. We are thinking of running a differences-in-differences estimation.
I would like to know whether:

With the sample that we have, is this estimation feasible?
If the estimation is indeed feasible, then why so?

If possible, please provide a detailed answer, for me to go over.


texts: What is the total that the US Government has spent on Economic Stimulus in 2020 and 2021 so far?

texts:
How much has the US government spent on the Economic Stimulus during this "time of covid"?
Bonus points if it includes (and itemizes) indirect spending like spending on Covid Testing and Vaccines (which indirectly are a stimulus)
Perhaps one way to look at this is: how much more has the US government spent in 2020 and 2021 so far as a result of Covid?


texts: How to determine correct fixed effects in linear regression model using unbalanced paneldata

texts:
I am currently working on a research project regarding the introduction of mandatory earnings guidance regulation in multiple countries within a time span of 10 years (staggered adoption). As I can see that my results depend on the FE I use, I tried to figure out how to determine which FE I have to use in this setting. Literature doesn't give a clear answer as different authors use different FE in similar models (firm, year, country, industry or a combination of those four). That's why I wanted to ask the community: Is there any rule-of-thumb or a precise answer on which FE I do have to include in my multi-year multi-country model (using linear model with an unbalanced dataset) in the form of:

  Market liquidity measure = b0 + Analyst_following * x1 + US_Listing * x2 + IFRS_User * x3 + MarketCapitalization * x4 + ShareVolatility * x6 + e

I have detailed firm level data for all variables. I would suggest industry-year FE, but don't have any arguments why I should use them (just intuition). Is there any clear guidance on which FE to use or any recommendation for a book adressing this topic in an inuitive way? Most books deal with social research questions (using e.g. race as FE as it does not change) but it is hard for me to transfer this logic to a business regulation setting...
What I want to measure is, whether the staggered adoption of the regulation has a significant impact on market/stock liquidity. Dependant/independant variables are derived from well-established papers in my field.

Any help appreciated!


texts: Why is the fed forbidden from buying gov't debt directly from the treasury?

texts: I know it's forbidden in its charter.  But what is the economic rationale?


texts: Implications for currencies pegged to USD of Chinese devaluation?

texts:
I get the general implications that exist for both US-Chinese exports/imports. However, considering that some currencies are pegged to the USD, would there be any effect and if so what?

Thanks


texts: Illustrating Karesh Kuhn Tucker with two non-nonnegativy constraints binding

texts:
I'm teaching Karesh-Kuhn-Tucker, and looking for papers, ideally in the fields of development, agricultural or environmental economics, and ideally in good journals, that I can use to illustrate the situation where the KKT conditions are satisfied with two contraints (not nonnegativity) are binding.
The corner solution circled in blue illustrates what I mean.  Would anybody be able to suggest some?    Thanks very muich indeed.


texts: What is the purpose of monetary expansion during an economic lockdown?

texts:
Recently, most developed countries central banks substantially lowered their base interest rate. In Australia, this is now at their stated lower bound of 0.25%. We also have QE. This is all in an attempt to stimulate the economy.

At the same time, we are going through a lockdown which shuts down large swathes of the economy.

What is the purpose of monetary expansion in this environment? It is clearly purportedly stimulatory, but with consumers so constrained, can it work in a meaningful way? Is the impact in financial markets sufficient?


texts:
I'm a college student; for my thesis I need some statistics about international classical music tourism.

I need some data about how big international classical music tourism is in terms of spending and how much tourists' passion for music economically affects their behaviour when they travel.

Where/how can I find some useful data (hopefully free)?


texts: Can a subset of variables in a lower triangular Cholesky identification scheme be ordered arbitrarily if we do not care about their shocks?

texts:
For example, in a three-variable SVAR model in Favero, C. A. (2001), the author uses Cholesky decomposition to identify only money shocks by ordering it last. Thus, both $p_t$ and $y_t$ affect $m_t$ contemporaneously, and this is the only identification condition in the model.

He mentions that the identification of shocks to $p_t$ and $y_t$ do not matter in the model. We can see here that $p_t$ affects $y_t$ contemporaneously but not the reverse.
In another example in the same book, $y_t$ contemporaneously affects $p_t$ which is in contrast to the example above. Again, he seeks to identify shocks only to $FF_t$, and hence does not discuss the ordering of the non-policy block of the model. I guess it is arbitrary.

I see same thing in Primiceri, G. E. (2005). Interest rates are ordered last in the VAR. The interaction between inflation and unemployment is arbitrarily modeled in a lower triangular form, with inflation first, unemployment second. So I guess unemployment could also be first.
Another example is by Drechsel, T., & Tenreyro, S. (2018). There are 4 variables in the VAR. The only identification condition is that commodity price is ordered first in the lower triangular Cholesky identification scheme. The author does not mention how the other 3 domestic variables are arranged in the model. So I guess, arbitrarily.
So my question is, in a lower triangular Cholesky identification scheme, one does not necessarily need to have an economic theory for all the orderings of the variables in the model, right? I mean, some of the orderings can be arbitrary if one do not care about the shocks associated with these aribitrarily ordered variables in the model?


texts: Numerical Solution Using Excel about optimal consumption of households

texts: I'm not sure how to solve this problem. I'm given the discount factor, interest rate, probability of high income shock, and various income shock sizes that I need to use to compute optimal consumption. This is confusing because I'm not given "c1" in the example, so I have to guess an answer for it. What should I do? The math should be simple once I figure out c1.


texts: How can I show whether the following function is Increasing, Decreasing, or Constant returns to scale?

texts:
I need to show whether or not the following function is increasing, decreasing, or constant returns to scale, but I can't figure out how to extract the t from it when it is put in the form $y(tX_1, tX_2)$.
$$
y = X_2\sin{\left(\frac{X_1}{X_2}-\pi \right)}
$$
Is there any other way of showing IRS, DRS, and CRS? Any help would be appreciated!


texts: R or Python for private sector economist/strategist

texts:
Quick question (but complex answer) : R or Python ?

I work as an economist/Strategist in the finance industry. As I do a lot of presentations, notes-writing, data searching, my programming time is limited but we try to develop “small scale” models to answer economic/finance questions. So, I mainly do standard stuff such as PCA/factor models SVAR with sign restrictions, VECM…I usually use what tools is best suited for the job (if I find replication codes I can adapt for instance), so usually MATLAB for SVARs and factor analysis, Eviews for quick and dirty stuff…

Now, I am looking at Python and R (which I dabbled with a few years go). Python is broader and I could use it for other stuff (like automate boring stuff with a comp or an iPad) but it seems there are fewer pure econometrics packages than in R (did not find anything for SVAR with sign restrictions for instance). I am looking to extract data from the web as well, and although they both seem to be able to do that, Python, seems more suited right ?

I know there is always the possibility of calling one from the other (with like Rpy) but then you need to learn both languages.
Any advice ?

Thanks!


texts: How should I regress income inequality on economic growth?

texts:
I would like to know which variables to use to regress income inequality on economic growth. For income inequality, I am thinking of using the Gini index, but don't know what measurement exactly.
For the growth should I use GDP per capita, GDP per capita growth, real GDP per capita, or just annual GDP values?


texts: What is the statistical program used in the Worldwide Governance Indicators?

texts:
I am interested in understanding the algorithm/methodology of the WGI  (the most cited and popular corruption/governance) World Bank Methodology. They try to publish as detailed as possible to the public but I struggle to figure out how they manage to solve the maximisation at page 97-99 here Governance Matters VII: Aggregate and Individual Governance Indicators, 1996-2007

Basically, they end up with a maximum-likehood estimation with three unknown parameters and state that it is a standard estimation. I am not an expert in Stata/Mata/Mathlab but honestly I can't see the trivial point.

Can anyone help and refer me to some statistical packages?


texts: Why does a firm make profit in a perfect competition market

texts:
I'm solving a problem about $n=180$ firms in a perfect competition market, where demand is given by $D(p)=100-5p$. A firm's cost function is $c(q_i) = 2 \cdot (q_i)^2$. Using $p = c'(q_i)$ and the demand function, I was able to derive the equilibrium quantity $q^* = \frac{1}{2}$ and price $p^* = 2$.
When asked about the profit each firm makes, I calculated a positive result for the individual profit in equilibrium $\pi_i^* = p^*\cdot q_i^* - c(q_i^*) = \frac{1}{2}>0$.
How is this possible? Is there not the assumption that a firm does not make profits in a perfect competition market? I know that there can be short term profits, but we assumed the market is in equilibrium here from the start. I'm new to microeconomics, coming from a mathematical background.


texts: What does "the event of economic consequences" mean?

texts:
I read a paper talking about the Operating Cycle. On page 6th, they said:

Sales of assets, no matter how disguised, are one-time events. In
contrast, cycling capital through the cycle and generating cash
contribution margins from operations hopefully is a repeatable event
and the event of economic consequences that justifies the existence of
a firm. It is the well of economic returns

From my understanding, sales of assets above mean that the company sells the timber, or oil, or cash equivalents, and they are one-time events. Then,"cycling capital through the cycle" means dollar leaves cash and go through other asset account, and $1.05 comes back into cash after a number of days. Then "contribution margins" means selling price per unit minus variable cost per unit.
I am wondering why they hope it is a repeatable event, and what does "event of economic consequences" mean in this sentence?


texts:
Assuming we're dealing with rational investors, the stock price is equal to the present value of all future dividends(supposedly discounting at the nominal or real interest rates should give the same present value).

Imagine the Central Bank increases the real money supply, from an initial state of equilibrium, and this increase is unexpected by the investors of the stock market.

Now we have the consequences of monetary expansion in the 'physical' economy:

In the short run, the expansion causes the nominal interest rate to decrease and the output to increase. However, in the medium run, the output reverts back to the natural level, and assuming for simplicity that the output growth rate is zero, the nominal interest rate also increases when compared to initial medium run equilibrium.
In the short run, real interest rate decrease. In the medium run it increases to the natural level, and remains equal to initial levels.

In a book I'm reading on macroeconomics, it's stated that since in the short run the output (and dividends) increase, and the nominal interest rate decreases, the stock prices will go up, because the monetary expansion was unexpected.

My question is: shouldn't the rational investor know that changes in the nominal interest rate are only short term, with the longer term effect being in the opposite direction, and hence it's not clear cut that stocks' price should go up? Or should they always go up? Is it due to expected inflation that counteracts the higher expected nominal interest rate?


texts:
Hi i like to invest in the stock market around the world does

it require to have a citizenship in that country
is there any specific amount to invest in it with a deadlock period
how can i track my investment around the globe with a single software/app
As the global economic growth is moving into Asian market BRICKS

hope have raised some interesting topics


texts: Why's a penny stock basically a call option with a strike price of 0 that doesn't expire?

texts:
This Reddit comment proclaims:

A penny stock basically IS a call option with a strike price of zero that doesn't expire.
I suspect there's a high correlation between penny stock investors and people who buy deep OTM options hoping for a home run.

I understand the concept of a call option that doesn't expire, but I don't understand "strike price of zero". Though penny stocks can $\rightarrow 0^+$, they must $\in (0, 1)$. So why would the strike price be 0?


texts: I've heard a lot of different economists bullet point a few main ideas as to why money is necessary. However, I'd like to get an ultimate rundown list. What are the major reasons why money is necessary for a culture to thrive?


texts: How to interpret income elasticity of demand

texts:
My question:

  Income elasticity of demand for apple is $\gamma$. Cross elasticity of
  demand between apple quantity and orange price is $\psi$,  What is the
  impact on apple's revenue if consumers' income increase by x% and
  orange price fall by y%?

What I think the answer is?:
Am I right I say that revenue would increase for the first instance (income) and the revenue will fall for the second instance.  However, how would I know the percentage of revenue increase in the first instances and fall in the second instances?


texts: The Backward Bending Supply Curve, Asymmetric Information, and Monopoly

texts:
This recent question about when monopoly is undesirable made me curious about when monopoly is actually desirable? I was reminded of an argument for the efficiency of monopolies when moral hazard effects create a backward-bending supply curve in competition, like in healthcare perhaps. But, for the life of me, I cannot remember exactly how this was justified or if I am just imagining the whole thing. Is anyone familiar with arguments like this?

I know you can create a backward bending marginal cost curve and then with the usual linear marginal revenue curve, you might have MR=MC at a greater quantity than where demand intersects marginal cost, but I don't understand how the backward bending supply is also a a marginal cost curve--then the curve isn't even a proper function.

Information is a funny thing, so I wouldn't be surprised if incomplete information made for strange results.

Edit: I am thinking of pictures like these. I am just having a hard time reconstructing the jump from a backwards bending supply or demand curve (I understand these--this is often taught in 101), I just don't understand the MB/MC interpretation below where it seems like you might get a higher equilibrium quantity with monopsony or monopoly.

For these to make sense, MC and MB can't be functions of quantity unless I have a marginal cost in each direction? As in I could sell $q_1$ at a high price a low price, so am I approaching from above or below.


texts: Is cash(currency) a security and a debt instrument?

texts:
I know that cash is a financial asset and securities are defined as tradable financial assets, so cash is a security, right?
Another thing I'm wondering is that whether cash/banknote is a debt instrument or not. On wikipedia it is defined as one of a debt securities.


texts: Weierstrass Thm: Continuous Fn Attaining Extrema on Compact Domain $u:\mathbb{R^L}\rightarrow\mathbb{R}$

texts:
This is just semantics, but MWG doesn't use the Weierstrass Theorem in its Math Appendix when using the fact that a continuous function always has a max value on any compact set.

Some books appeal directly to the Weierstrass Theorm.

Is there a right or wrong answer to this? Or is it more just, like I said, semantics?


texts: Understanding a multi-player Tragedy of the Commons game

texts:
In the formulation of the Tragedy of the Commons below, what does $n$ exactly represent? Is a threshold? The text is from plato.stanford.edu website on Kuhn's Prisoner's dilemma.

Also, it says that $\bf D$ strongly dominates $\bf C$ for all players, and so rational players would choose $\bf D$ and achieve $0$, while preferring that everyone would choose $\bf C$ and obtain $C+B$.

I don't understand the last part. The reason $\bf D$ dominates $\bf C$ is because either the player gets $B$ or $0$ which are better from $C+B$ or $C$. Why would rational players prefer everybody to cooperate?


texts: Reason for marginal revenue is less than price in monopoly

texts:
I understand the fact that marginal revenue is less than price because in the monopoly firm faces a downward sloping demand curve.

As well as, by expanding output firm is going to lower the all the cost of its previous outputs as well.

However, I don't fully get the picture how this is appropriate.

Is there any good example in real life?


texts: Independently and Identically distributed random variables

texts: What does it mean for two random variables to be "identically distributed"? Does it mean that they come from the same probability distribution?


texts:
What I am doing: I use the regression discontinuity design (henceforth RDD) to study differences in wages received by people born at the end of the year and by those people born at the beginning of the year. I have a panel dataset with observations on 5 years in a row and use Stata. My running variable is the amount of days between the date of birth and the end of the calendar year. The cut-off date is January 1st.

The problem: I pool observations across years, but in doing so now the running variable presents no value on its left.

My proposed solution to this problem: I move the time window of interest from Jan-Dec to July-June. This implies the creation of a new running variable where 0 is assigned to people born on July 1st,..., 30 is assigned to people born on July 31st,...,and 364 is assigned to people born on June 30th. Now the cut-off value is 183, which still corresponds to January 1st. Finally, I also center this new variable as recommended by the literature on RDD, so that July 1st is now -183, January 1st is now 0, and December 31st is +183. Now I have observations both on the left and the right of the cut-off value of the running variable; this new variable also allows me to run the RDD with different bandwidths.

My questions:

What do you think about this new re-scaled variables? Could this
solution be considered data manipulation in bad sense? (like, am I
inventing data and get results that do not reflect reality?)
I am using the sharp RDD, is this appropriate?
If sharp RDD is appropriate, should I use also the fuzzy RDD as
robustness check? (As robustness checks I already use different
tools, as proposed here)

This question is present also in "Cross Validated."


texts: What does the seasonal adjustment curve for major macroeconomic metrics look like?

texts:
All the explanations of seasonal adjustment that I found from a quick search either don't give any quantitative examples, or give an example with a time series that is either made up or represents an extremely specific microeconomic data set.

I'm curious, what does the seasonal adjustment curve look like for major macroeconomic variables like GDP or the unemployment rate? I don't need precise numerical values; I'm just curious about what the curve looks like visually - what are the busier and slower times of year, and what is the order of magnitude of the deviations from the annual mean.

(I know there are different methods for seasonal adjustment, e.g. additive vs. multiplicative models - either one will do.)


texts: Why do some prices contain a sequence of a digit repeated several times?

texts:
I know about the psychology behind prices that end in 9 or 99, but I'm starting to notice that some prices contain the same digit (not 9) repeated two, three or even four times.

For example, in this week's leaflet a popular German supermarket is advertising tangerines for €1.11, plum tomatoes for €0.88 and onions for €0.66, but nearly all their other prices end with a 9. I remember seeing this pattern also in other circumstances, like a restaurant offering sandwiches for €7.77, and in phone rates.

What is the point of having prices like that? Do they make the product more interesting in any way?


texts: How to estimate empirically a demand curve

texts:
Suppose I have a small business that sell ice creams.
An Icecream cost 2$, and every day I have different values of sales.

Day 1: 50 sales
Day 2: 70 sales
Day 3: 30 sales
Day 4: 50 sales

How to I estimate the demand curve?

Should I change every day the price of the icecream and see how many sales I get? (the variation could be caused by many other factors)
Should I do a linear regression on the sales data?


texts: Efficient Market Hypothesis and constant ex-ante real interest rates?

texts:
According to Hayashi's Econometrics (page 151), efficient market hypothesis is a joint hypothesis combining:

Rational expectations $\rightarrow$ expected inflation$= \mathbb{E}(\pi_{t+1}|I_t)$, where $I_t$ is the information available at the beginning of the period.

Constant Real Rates $\rightarrow$ The ex-ante real interest rate is constant.

Why is the second one also included? I've searched the wikipedia, but I didn't find anything helpful.

Any help would be appreciated.


texts: Why is Canada's unemployment rate higher than that of the US, UK, Germany and the Netherlands?

texts: Current unemployment rate in Canada is about 5.8% while countries such as the US, UK, Germany and the Netherlands have unemployment rates well below 5%. In addition, the current unemployment rate in Canada is the lowest on record. Why has it remained so high historically?


texts: Why is Engel curve a straight ray through the origin if $D_wx$ = x(p, 1)$?

texts: I see in the textbook that the Engel curve will be straight if $D_wx(p,w) = x(p,1)$ but it's not immediately clear to me why this is the case. Could someone kindly explain to me?


texts: Is a lack of "rules" dangerous for cryptocurrency

texts:
An issue/disadvantage that the gold standard had was a lack of mechanisms that forced economies to abide by the rules of the game. As a result, they could at any time de-monetize gold and therefore hurt the whole purpose behind it.

Can't this same idea be applied to crypto-currency? If one day individuals decide to not put any value behind XYZ-Therum Crypto (using a generic name), won't that cause a collapse?

Also, isn't there a danger in the lack of regulations behind it?

Why can't I invent MikeIsCool-Coins. I make a website, with a wallet and say that the direct quote for MikeIsCool-Coins is 1BTC. I then give myself how ever much I want MICC, trade it to bozos for BTC, then sell the btc for USD, renderring myself a millionaire?

And this scheme, as a result of a lack of regulation puts no consequences on me?

Thank you, I'm just trying to challenge crypto. I think a currency backed by prime numbers (something that itself holds no value, where FIAT money is based by a promise) is complete nonsense.


texts: What is the effect on society of me choosing to make my own shoes, food, or clothing?

texts:
This question comes from someone who suggested brushing my teeth benefits the economy because it reduces demand for dentists, lowering the price. However, when I think more generally of making my own shoes/clothing my decrease in "clothing-services" leads to an increase in demand for the raw materials, in this case fabric. (I am ignoring the time it takes to learn how to make clothing.) Or suppose everyone simultaneously decided restaurants were unhealthy and started cooking at home; the restaurant industry would collapse, but would agriculture stay the same?

Is the economy the same, worse, or better when a consumer switches from buying a good to buying the raw materials for that good to manufacture it themselves?


texts: Question on Human Capital Accumulation Model by Acemoglu/Autor

texts:
I was reading the lecture notes by Acemoglu and Autor on Labour Economics. https://economics.mit.edu/files/4689

I was able to understand equations 1.1 to 1.8 of the notes; however, I am unable to understand how equations 1.9 and 1.10 were derived from equations 1.8 and 1.9 respectively. I understand that integration and differentiation was applied, but I am not able to figure out the exact steps involved.

For the transition from equation 1.8 to 1.9, I tried to understand in terms of general power rule and general exponential rule of integration, but there are so many terms involved that I am unable to think how these rules apply.

For the transition from 1.9 to 1.10, I tried to understand in terms of general product rule and quotient rule of differentiation, but I am unable to figure out exact steps.

I would deeply appreciate if anyone could help me understand these steps. Please let me know if any other info is required from me.

Thank you.


texts: Can the stock market show indefinite exponential growth?

texts:
In a comments on a question on money.SE, the following dialog took place:

  Eventually there will not be enough matter to represent all the money, so we know for certain that the answer is "No" for a long enough term.

--yters

  What do you mean by "represent?" Do you mean that we won't be able to build computer chips that can store a digital representation of someone's stock income? Do you mean that we will no longer be able to cash out our stock portfolio into a fixed commodity like gold, at a fixed dollar price? The former seems wrong to me, and the latter irrelevant.

-- BenCrowell

  @BenCrowell: the stock market is not abstract, it depends on investors expectations on the real economy. Its obvious that the economy cannot grow forever, as the planet (and its resources) are finite.

-- Martin Argerami

I'm not convinced by the argument that Martin Argerami claims is obvious. It seems to me to rest on a false assumption that value is measured by resources, e.g., that a dollar's "true" value is measured by how many milligrams of gold it can buy. But I'm not an economist. Would anyone like to take a shot at explaining who is right?


texts: Empirical justification for a constant-returns-to-scale production function in the Solow model

texts:
I am currently learning the Solow model of growth, where a constant returns to scale production function for the economy is assumed. I realise that the assumption makes further analysis much simpler, by allowing us to write output per unit productive labour simply as a function of capital per unit productive labour.
Apart from the mathematical convenience, is there any empirical reason for evoking the CRS assumption? Where can I read studies that have tested this claim?


texts: Economic Reasoning for Structural change vs Cyclical change

texts:
Often when there is an episode of low output growth, a debate takes place: Whether the downturn/recession is due to structural factors or is it cyclical.

I understand that the analysis is largely based on statistical estimation wherein it is checked whether there is decline in trend growth or it's the beginning of trough in business cycles.

How do I understand this in terms of pure economics? Broadly I think answer lies in understanding causes of business cycles. But without statistical estimation, how can one argue that a recession is cyclical or due to structural changes?


texts: Can heterogeneous prices be consistent with competitive equilibrium?

texts:
I do not want to put many constraints on the structure of the problem, except by defining a competitive equilibrium as such where firms are price takers in the factor and good(s) market, and, perhaps (?), that firms make no profits.

For example, is it possible to have something like "competitivistic" competition, where consumers have love for variety and firms produce differentiated goods, yet, instead of monopolistic competition, firms do not charge a markup, because there is free entry, so that firms end up producing at zero profit?

Or for example, a model of consumers geographically immobile, and where differentiated transportation costs across regions mean firms need to charge a markup to pay for that cost, and where, again, free entry deter firms from exploiting consumers?


texts: What effect has the 30% increase in money supply from Feb-June of 2020 had?

texts:
I commented on a previous question that this is probably a better one. Old question
Generally speaking, how has the increase in money supply resulting from the CARES act stimulus package affected the macroeconomic state of the US? Everything I've found to date is "Well, it hasn't, really" which just seems absurd. There's been a 30% increase in the M1 money supply, and a nearly 18% increase in M3. Did it actually just offset the decrease in velocity of the price level equation P=(MV)/Y to "maintain balance"? What if consumer and business confidence skyrockets for X reason next month, thousands of M&A deals go through, homes are bought and sold, etc etc and velocity to 2007 levels by end of year (I know unlikely, just trying to understand implications with an extreme).
If there's simply more background reading I need to do, links are always welcome.
Reference:
30% increase in M1
18% increase in M3
EDIT:
This article was published Bloomberg this morning.

Excluding volatile food and fuel costs, the so-called core CPI --
viewed by policy makers as a more reliable gauge of price trends --
rose 0.6% from the prior month, the biggest jump in almost three
decades, after a 0.2% increase in June. On an annual basis, core
inflation measured 1.6%, a four-month high, following 1.2% in June.

This is more or what I was expecting to see, and while it obviously isn't a direct causal relationship to the stimulus, is it safe to make that connection? If not, why not?


texts: How does the Greenspan/Bernanke Put semantically relate to put options?

texts:
If rational investors reckon that "the Fed, under Alan Greenspan, its longtime chairman, would always bail stock investors out of their losing positions", then rational investors would buy call options or sell put options, not buy puts. So how can a Greenspan or Bernanke Put be sensibly analogised to a Put Option?
Greenspan and Bernanke Put and Other Central Bank Tools

The term Bernanke put has become almost as ubiquitous as the Greenspan put was during the late-1980s and 1990s. Derived from the concept of a put option, these terms refer to central bank policies that effectively set a floor for equity valuations. For instance, Alan Greenspan was known for lowering the Fed Funds rate whenever the stock market dropped below a certain value, which resulted in a negative yield and encouraged movement into equities.
In these situations, investors have been given a put option of sorts by central banks, since they have a price floor in place. For example, an investor holding shares of a broad market index may have a sort of guarantee from the central bank that the stock won’t drop below 20% since if it did, the central bank would intervene with low-interest rates to boost equity valuations. There was no actual guarantee by the central bank, but the precedent was enough for many investors.

Economist's View: The "Greenspan Put" and Excessive Risk Taking

This article argues that many people view the Fed as an insurance policy against financial market risk and believe that the Fed would not allow substantial asset devaluation.  My own view is that people ascribe all sorts of motives to the Fed that aren’t there.  The Fed is trying to tell us that it’s really simple (as are Kash at Angry Bear and Tim Duy in a Fed Watch).  Watch output and inflation relative to target and adjust accordingly.  We can argue about how to measure output, the target, and how to parameterize “accordingly” in the Taylor rule, but those are details, the essence is simple.  The Fed’s behavior is explained very well with a Taylor rule and reinterpreting it as an insurance program or something else is an entertaining exercise, but we probably shouldn’t take it much beyond there.

Understanding the Greenspan, Bernanke, Now Trump "Put" - Halbert Wealth Management - Commentaries - Advisor Perspectives

The term Greenspan Put was coined in the late 1980s as a result of certain policies implemented by then Federal Reserve Chairman Alan Greenspan. He was Fed Chairman from 1987 to 2006, followed by Ben Bernanke from 2006 to 2014 when the term changed to the Bernanke Put.
Throughout both men’s terms as Fed Chair, they routinely lowered the Fed Funds rate to help support the economy, which in turn helped the stock markets. As this practice went on, investors came to view the Fed’s policy of lowering interest rates to shore up the economy and risk assets as something akin to a “put” option.


texts: Set of Bayes Correlated Equilibria when complete information is not available

texts:
Model

Consider a game where a decision maker (DM) has to choose action $y\in \mathcal{Y}$ possibly without being fully aware of the state of the world.

The state of the world has support $\mathcal{V}$.

When DM chooses action $y\in \mathcal{Y}$ and the state of the world is $v\in \mathcal{V}$, she receives the payoff $u(y,v)$.

Let $P_V\in \Delta(\mathcal{V})$ be the DM's prior.

The DM may also process some signal (formalised by the concept of information structure) to refine his prior and get a posterior.

Question

Let us define the concept of 1-player Bayesian Correlated Equilibrium provided in Bergemann and Morris (2013,2016,etc.).

$P_{Y,V}\in  \Delta(\mathcal{Y}\times \mathcal{V})$ is a 1 player Bayesian Correlated Equilibrium if

1) $\sum_{y\in \mathcal{Y}}P_{Y,V}(y,v)=P_V(v)$ for each $v\in \mathcal{V}$

2) $\sum_{v\in \mathcal{V}}u(y,v) P_{Y,V}(y,v)\geq \sum_{v\in \mathcal{V}}u(k,v) P_{Y,V}(y,v)$ for each $y$ and $k\neq y$.

Theorem 1 in Bergemann and Morris (2016) claims  that the set of 1-player Bayesian Correlated Equilibrium is equal to set of optimal behaviours under a range of possible information structures (this result holds in fact for any n-player game, thus also for $n=1$ as in this case).

Such information structures can go from the degenerate information structure (i.e., no information whatsoever on that state of the world and, hence, prior is equal to posterior) to the complete information structure (i.e., full revelation of the state of the world).

My question is: can we characterise the collection of 1-player Bayesian Correlated Equilibria for the model above under the assumption that the complete information structure is not available to agents (i.e., agents are not able discover the exact value of the state)? If yes, how? I believe it should amount to inserting a third constraint in the definition above but I can't see which one.

Does Theorem 1 in Bergemann and Morris (2016) still hold in that case?


texts: Understanding at a quote about externalities in law and economics

texts:
that something is an externality is partly a statement about physical reality and partly a statement about the legal system.

What does this mean? I assume the aspect of externality being a physical reality problem is just people only care about self interest so externalities can occur. However I don't understand how something is An externality could be a statement about legal rule.


texts: Balance of Payment (BPM6) - Direct Investment: how to record

texts:
I have a question related to recording in BOP
Let say we have two countries:

DOMES (domestic country)
EXT (external country)

a company in EXT invest a new factory in DOMES. I don't know how this would be record in BOP
I know that one side of transaction is recorded under:

FINANCIAL ACCOUNTS // DIRECT INVESTMENT // Net Incurrence of Liability // Equity and Investment fund shares // quity other than reinvestment of earnings (3AA100 L AA)

but I don't know where is the other side will be recorded.
Thank you
Phan


texts: How popular are alternative standard of living measures amongst economists?

texts:
GDP as a measure of the well being of an economy has been criticised as not being an accurate measure of the quality of an economy, as it excludes non-commericial interactions (such as housework or volunteer work) and includes negative events (such as graffiti and cleaning up after it) as economic activity.

However, at the same time, GDP is a good predictor of a society's wellbeing.

Some people have suggested instead of relying on GDP as the primary measure of an economy's performance, we should use something like the Genuine Progress Indicator (warning: PDF).

The question is, how much traction does this idea have, in economic circles?


texts:
I learned from the Fischer Effect that

Real Interest Rate = Nominal Interest Rate - Inflation Rate .

But in today's class the professor told us that due to money neutrality, an increase in money growth doesn't affect the real interest rate, just nominal interest rate.

The reason this is confusing to me is that when money growth increases the nominal interest rate decreases.

so it definitely affects the real interest rate.

I'm aware that this is the short-run affect. Nominal interest (decrease) - Inflation rate (increase) = Real interest Rate (decrease)

So why, in the long run, doesn't real interest rate change? Why is nominal interest rate the only variable affected?

Everyone's been answering "its because money neutrality applies to the long-run". I don't really like this answer because it still doesn't explain why money growth doesn't affect "real interest rate" out of all real variables.

So my question is this: Why does the increase in money supple not affect real interest rate? Could someone explain this in an economic context, containing the behavior of agents, not in  some kind of mathematical way like "its because of money neutrality" which has no economic logic to explaining why money supply doesn't affect Real Interest Rate in the long run .


texts:
We live in continuous time. Let there be some discount rate $D(t)$, which consists of a discount rate, and some death probability. $V(t)$ contains the flow value of, say, being alive. If you are alive, you get some flow value $A(t)$ every period. I have started at the following discrete-time equation

$$ V(t) = \Delta_t A(t) + \beta(\Delta_t)V(t+\Delta_t)$$

where $\beta(\Delta_t)$ is related to the discrete-time analog of $D(t)$. I have derived, through some reordering of terms, and letting $\Delta_t \to 0$, the following equation:

$$ V(t) = \frac{A(t)}{D(t)} + \frac{V'(t)}{D(t)}$$

Unfortunately, I cannot trust in the flow values $A(t)$ being continuously differentiable, and hence I don't think that $V(t)$ is continuously differentiable. I hence want to rephrase this equation in a way that does not require the derivative $V'(t)$.

I was expecting the resulting $V(t)$ to have the shape of

$$ V(t) = \int_{t}^\infty D(s) A(s) ds  $$

That is, the discounted sum of future fundamental values. Basically, I'm looking for the continous-time equivalent of

$$ V(t) = \Delta_t A(t) + \beta(t)A(t+\Delta_t) + \beta(t)\beta(t+\Delta_t) A(t+2\Delta_t) + \cdots$$

I tried to get there by integration:

$$ \int_t^{\bar t} V'(s) ds = \int_t^{\bar t} D(s)V(s) - A(s) ds \\
V(\bar t) - V(t) = \int_t^{\bar t} D(s)V(s) - A(s) ds
$$

However, this doesn't seem to help into getting it as a present discounted sum. What would be a correct approach here?


texts: Can the Gross Value Added be negative when calculated using the production approach?


texts: Amidst Anarchocapitalist authors such as Murray Rothbard, are there any who discuss the possibility of privately-owned countries, with their own set of private laws, police services and courts?


texts: What would be the likely economic consequences of the "trillion dollar coin" idea to eliminate all government debt?

texts:
Taken from this question over at politics.se, consider this article by Business Insider which describes a scenario in which the treasury mints a trillion dollar coin to pay off all the debts of the U.S. government.

  The premise of the idea is this: Although the Treasury can't just create money out of thin air to pay its bills, there is a technicality in the law that says the Treasury has special discretion to create platinum coins of any denomination, and the thinking is that Tim Geithner could make the coin and walk it over to the Federal Reserve and deposit it in the Treasury's bank account.

What would be the likely consequences of this type of action by the treasury? Specifically:

What would be the impact to inflation?
What would be the impact to the value of treasury bills? Particularly: a) those currently in issue and b) those issued in the future?
Could the answer to the question of how to pay for all future spending proposals simply be to mint another coin?
If you were an economist advising the administration on economic policy, would you advise in favor or against such a policy action. What would be your reasoning for your policy advice?


texts: I was wondering whether there exists a study which measures the impact of economic news coverage to gdp or something like that


texts:
Okay, So this is the whole question. It's a bit far. But i just have one question about it:

So in question c) we have the equation for the sharpe ratio as:
$$\frac{E(w_1R_{1A} + w_2R_{2A})}{\sigma_c}$$

Where

$$\sigma_C = w_1^2 var(\beta_1 R_{1t}) + w_2^2 var(\beta_2 R_{2t}) + 2w_1 w_2 Cov(R_1R_2)$$

We have the $2cov$ here, but in e) question. The right answer is that they not have the $2cov$ here. Otherwise it is the same equation.

Why?

/


texts: get statistics about the research intensity of an industry

texts:
I want to know how much research is conducted in an industry in order to be able to say Industry X is more research intense than Industry Y.

For industry categorization I use the NACE classificiation.

I know that research intensity per se is an indicator which can be calculated as:

Ultimately, I want to be able to say, that some industries are more welcome to conduct R&D projects.

Please let me know, if there are any more suitable indicators than R&D intensity. Someone (informally) told me, that R&D intensity is out of fashion, and that IPP (intellectual property products) would be more suitable. However, I am not sure about that.


texts: What does it mean when we say an iso curve has no interior?

texts:
From the paper: "Standard Auctions with Financially Constrained Bidders" - by Che and Gale. The authors describe an isobid curve as the curve that represents payments of the same value in a 2-dimensional plane (wealth and valuation). They state that:

"The isobid curves are negatively sloped and have no interior"

What does it mean that an iso curve has no interior?


texts: Does it matter which is the dependent variable in regression of time series data?

texts:
I am testing for cointegration between the Real GDP per capita of England and France. I use a Dickey-Fuller test to test for stationarity and concluded that both of my series are non-stationary. So I then ran the regression and did the second Dickey-Fuller test for co-integration on the residual. Here is what I am confused about:

If I ran the regression and had rgdpe of England as a dependent variable I concluded that my regression was spurious. (My residuals were non-stationary).
If I ran the regression and had rgdpe of France as a dependent variable I concluded that the rgdpe are cointegrated (My residuals were stationary).

Can anyone explain the reason for this discrepancy?


texts: When a country collects data for calculating the Gini index, do they usually neglect single household?

texts: OECD data for South Korea is based on the numbers provided by Statistics Korea, which does not count single household family income data in their statistics. I am just curious that neglecting single household is a general or traditional statistical method for getting sound Gini index so other countries use same way Or, it just happens in South Korea. Recently, The number of single households are growing fast, and usually their incomes are lower, so neglecting single household data leads lower Gini index, which means lower inequality. Do the other countries use the similar criterion for gathering data for Gini index? If the countries use different criterion , where could I find that?


texts:
I am looking for some statistical models that are accepted to best predict inflation rates. Anything that is more complicated than linear model will be appreciated. Or even recommend books that discuss inflation predictions.

I would also be interested in models that could relate inflation to GDP(or some form of feature extracted from gdp).


texts: What's the difference between a "consequential" and a "direct" externality?

texts:
I'm reading Png & Hui on the economics of privacy. (http://128.118.178.162/eps/io/papers/0505/0505007.pdf great review article). Can someone explain the difference between direct and consequential externalities to me? as in:

  "Generally, in competitive settings, an improvement in the accuracy of
  productive personal  information may lead the less informed party
  (seller or employer) to include more or  exclude some marginal persons
  (consumers or workers).  This is a consequential externality on some
  members of the better-informed side of the market.  The consequential
  externality might be positive or negative. "


texts: What is the “entry price” in relation to tariffs?

texts:
I see the term “entry price” and “price entry system” in relation to tariffs.

What do these means?

For example this document: https://ageconsearch.umn.edu/bitstream/10095/1/sp06go22.pdf


texts:
I have been having trouble with how to go forward with a proof for about three days now. I know the basic structure of the proof, but can't seem to construct it.

Basically, I am trying to do a proof by contradiction for the following:

Say $u: x \rightarrow \mathbb{R}$ has no local maxima. Let $p \in \mathbb{R^l}_{++}$ and $w>0$. Show that if $x^*$ is a solution to the maximization problem:

$$\max_x \ (u(x)) \ \text{s.t.} \ x \in B(p) = [x \in \mathbb{R^l}_{++} : p \cdot x \leq w]$$
then for all $y \in \mathbb{R^l_{++}}$ such that $u(y) \geq u(x^*)$, then it must be that $p \cdot y \geq w$

So I'm supposed to do this proof by contradiction, (suppose we have $y \in \mathbb{R^l_{++}}$ such that $u(y) \geq u(x^*)$, then it must be that $p \cdot y < w$) and use the fact that $u$ doesn't have a local max implies that the function $u$ is locally non-satiated:

$$\forall y \in \mathbb{R^l_{+}, \forall \epsilon > 0, \exists {y'} \in \mathbb{R^l_{+}}} \ \text{s.t.} \ \|y - y'\| < \epsilon \ \text{and} \ y' \succ  y$$

But I've been stuck for a while now. Any help would be appreciated.


texts:
This question is related to economics on the blockchain. Bonding curves are becoming popular; however, it is a bit concerning that the price on an asset is predetermined by a mathematical function. Will the use of bonding curves distort or somehow disrupt the market? In my opinion bonding curves are the wrong mechanism to use in a market economy.

Suppose the real value of an asset is significantly smaller than the sell curve. The sell curve allows me to sell only at a specified price (the price that corresponds to the current volume of issued tokens). How is this mechanism market efficient? It seems that this mechanism will work for curation markets, but it will not work as an automated market maker for assets similar to equity securities. Please, correct me if I'm wrong.


texts: Unique features of Property & Urban Economics

texts:
The real estate sector represents a substantial share of the economy. Analysing such a sector provides it's own unique challenges. For example, it is important to variables such as population forecasts, proximity to CBD, rental rates among others.

What are the main tools, metrics and considerations used in property market analysis?


texts:
Today I read:

  One of Britain’s chief exports is Banking Services.

Now I presume that doesn’t mean consumer savings accounts.

I presume it means investment loans to companies and equities holdings in foreign companies. (Some might argue these are similar)

But if a bank has holdings in a foreign company, is it really exporting Banking Services? Isn’t that just owning things?

My question is: What is the concrete meaning of Britain saying they export Banking Services?


texts: Solution to Dynamic Programming (Bellman Equation) Problem

texts:
Could someone please provide pointers on how to solve the below? If any theoretical approximations are possible, that would be very helpful. If numerical solutions are the right approach, could you suggest how we can do this in R (restricted to free software due to limited, actually zero, funding; hence R pointers would be most welcome)?

The Bellman equation to be solved is given by,

$$
V_{t}\left(Y_{t-1},Z_{t}\right)=\underset{\left\{ X_{t}\right\} }{\min}\:E_{t}\left[\max\left\{ \left(Y_{t}-Y_{t-1}\right),0\right\} Z_{t}+V_{t+1}\left(Y_{t},Z_{t+1}\right)\right]
$$

Here, the notation stands for,

$V_{t}\left(Y_{t-1},Z_{t}\right)$ is the value function at time $t$.

$E_{t}$ is the Expectation taken at time $t$.

$X_{t}$, is the quantity or amount of goods acquired in period $t$ at price $Y_{t}$.

$Z_{t}$, is the number of units that we still need to acquire at time $t$.

$\bar{X}$ =$Z_{1}$, the total quantity of the good that is required.

$T$, the total number of time periods.

$X_{1},...,X_{T}$ is the list of acquisitions that we want to make and needs to be determined.

A simple law of price motion is assumed as below,

$$
Y_{t}=Y_{t-1}+\theta X_{t}+\varepsilon_{t}\;,\theta>0\:,E\left[\varepsilon_{t}\left|X_{t},Y_{t-1}\right.\right]=0\;,\;\varepsilon_{t}\sim N\left(0,\sigma_{\varepsilon}^{2}\right)
$$

$N\left(0,\sigma_{\varepsilon}^{2}\right)$ is a normal distribution with mean zero and variance $\sigma_{\varepsilon}^{2}$

Also, the following properties hold,

$$
\sum_{t=1}^{T}X_{t}=\bar{X}\;,X_{t}\geq0\;,Z_{1}=\bar{X},\;Z_{T+1}=0\;,\;Z_{t}=Z_{t-1}-X_{t-1}
$$

PS: Please note, this is not posted on the Mathematics website to solicit answers from a wider audience.

https://math.stackexchange.com/questions/2694694/solution-to-dynamic-programming-bellman-equation-problem


texts: A few variables expressed in units of a standard normal distribution in a regression

texts:
I am using three of the Worldwide Governance Indicators (WGI) estimates. They represent broad dimensions of governance for countries. All indicators range from -2.5 to 2.5 approximately. They are expressed in units of a standard normal distribution.

For your information: here is the link to the website: https://info.worldbank.org/governance/wgi/Home/Documents#doc-intro

I want to use these indicators in a panel regression as control variables. All my other variables are not expressed in units of a standard normal distribution. Is it a problem? Do I need to convert the governance indicators (-2.5, 2.5) to another scale (0, 1)? Will the 'econometrics' make sense?


texts: What is the impact of money "sent" to another country?

texts:
I've been thinking about this a lot and I am not sure I have understood correctly. I was thinking about, for example, migrant workers who send a portion of their income back home, or wealthy individuals who hold money in offshore accounts (in a foreign currency).

Very often I see these sorts of scenarios represented as money being "lost" by the source economy and gained by the destination economy. However, if one thinks about the transactions involved, what is actually happening is that value is being exchanged between two isolated economies. Similar to (to use a tired plumbing analogy) a heat exchanger which transfers heat from one plumbing system to another whilst the medium (currency) within each system never directly interacts.

If somebody transfers their money from one economy to another via an FX trade, they purchase, for example, Dollars with their Euros and they now have some Euros which represent the value previously represented by their Dollars, whilst the Dollars they previously had are taken by whomever sold the Euros and put back into the Dollar economy they came from.

Therefore, there is no change in the quantity of money in either economy, so there are no gains or losses. Have I understood correctly?

The only potential downside I can see is that there may be a subsequent imbalance in wealth distribution in the destination economy, but that's the opposite of the way it is presented where the downside is on the source economy. Does this make sense?


texts: What benefit is there to shutting down the banks in Greece? It seems that this would do more harm than good. Won't this impede economic growth by not allowing companies and startups access to capital? This, I believe, would cause the crisis to last longer or get worse.


texts: Why does profit maximization implies that both of the following are equal?

texts:
Why Profit maximization implies that rate of return to capital equals the net marginal product of capital. Prove and give intuition why both are equal.

I also wonder that why it doesn't implies rate of return to capital equals the net marginal product of labor?

The highlight part and equation (6.32) is my concern

Please zoom in the web browser to view the image more clearly(press ctrl + turn the scroll wheel of the mouse simultaneously).


texts: Did I calculate the expected value and the variance correctly?

texts:
I have the following assignment to solve but I'm not sure if I solved it correctly.

Questions

  Let the stochastic process $(Y_t)_t$ be defined by $Y_t = \mu + Y_{t-1} + \varepsilon _t$ with $(\varepsilon _t)_t\sim \mathrm{WN}(0,1)$.

  a) Calculate the expected value and the variance of $(\Delta Y_t)_t$.

  b) Prove that $(\Delta Y_t)_t\sim \mathrm{MA}(1)$ and calculate the autocovariance function of $(\Delta Y_t)_t$.

My solutions

a) \begin{eqnarray}
Y_{t+1} &=& \mu + Y_t + \varepsilon_{t+1}\\[1ex]
\implies \Delta Y_t = Y_{t+1}-Y_t &=& \mu +\varepsilon_{t+1}\\[1ex]
\mathrm E(\Delta Y_t ) &=& \mu + \mathrm E(\varepsilon_{t+1}) = \mu \hspace{6cm} \\[1ex]
\mathrm {Var}(\Delta Y_t) &=& \mathrm{Var}(\varepsilon _{t+1}) = 1
\end{eqnarray}

b) \begin{eqnarray}
(\Delta Y_t)_t &=& \mu + \varepsilon_{t+1} + 0\cdot \varepsilon_t \\[1ex]
\implies \mathrm{ACV} &=& \mathrm{Cov}(\Delta Y_t, \Delta Y_{t-h})\\
 &=& \mathrm{Cov}(\varepsilon_{t+1}, \varepsilon_{t-h+1}) = \left\{\begin{array}{ll}
1 & h=0 \\
0 & \text{otherwise}
\end{array}\right.
\end{eqnarray}

What do you think?


texts: A general drought in the world, raises the total income that farmers receive?

texts:
I need to write 6-7 lines explaining why is the following statement true:

A drought around the world raises the total revenue that farmers
receive from the sale of grain, but a drought only in
Kansas reduces the total revenue that Kansas farmers
receive.

I have few answers in my mind, but I have no economy training so it's really difficult for me to express my self using economic terms.

Is anyone kind to provide me a comprehensive answer.


texts: Growth Accounting with variable factor shares

texts:
Under the assumption of competitive markets, the usual growth accounting equation using Cobb-Douglass function is as follows:

$\Delta Y/Y = \Delta A/A+w_l\Delta L/L+w_k\Delta K/K$

$Y$ is output
$K$ & $L$ are factors of production
$w_i$s are constant factor shares

Almost all empirical papers I've read so far assume constant factor share values $w_i$s regardless of the sample span. Usually the papers assume $w_l=0.7$ and $w_k=0.3$. I believe the results would be different if we let the factor share values vary over time in the growth accounting exercises.

Does anyone know of paper(s) that use growth accounting method by utilising actual data on factor shares?


texts:
fixed capital: any kind of real or physical capital (fixed asset) that is not used up in the production of a product

public goods: goods that are non-rival and non-excludable in consumption

Both of the terms above seemed like they are talking about something similar so can I say that fixed capital all belong to the category of public goods?


texts: How to find opportunity cost if each choice has more than one important effect?

texts:
Let me start with an example where I DO understand how to find opportunity cost.
Suppose I have choice to either work for firm A (\$1000 wage) or for firm B(\$2000 wage) or for firm C(\$500 wage). If I choose frim B, then I will forgo my best out of remaining alternatives, namely wage that I would get working for firm A.

Now let's add another aspect:traveling time. Working for different firms will imply different time needed to spend on traveling back and forth between my home and work. Suppose I can't monetize saved time, but I prefer to have more free time nonetheless.

I have three choices, between firm A(\$2000 wage, 2 hours traveling time), firm B(\$1500 wage, 1 hour traveling time) and firm C(\$1200 wage, 0.5 hour traveling time). Suppose I chose to work for firm B, what will be the opportunity cost of such decision? Two things confuse me in this case. There seems no clear way to pick the best alternative and then declare its effects (i.e. wage and traveling time) to be opportunity cost. Firm A offers better wage than firm C, but firm C offers lower traveling time than firm A.On ther other hand, our choice has two effects (wage and traveling time), is it really correct to take them both and declare as ONE opportunity cost, rather than two separate opportunity costs?


texts: Difference between social choice functions and social decision functions?

texts: A social decision function (SDF) à la Sen (1970) is defined as a collective choice rule whose range is restricted to social preference relations which generate a choice function. From Gaertner (2009), a preference relation $R$ generates a choice function over a set $X$ if and only if $R$ is reflexive, complete and acyclical over $X$. I thus struggle to understand where exactly the difference between a SDF and a social choice function (SCF) à la Gibbard-Satterthwaite lies. A SCF is itself a choice function, so the preference relation $R$ generating it must satisfy the same conditions as the one generating a SDF.


texts:
Given the following 3 equations:
$$
Y^*_t=100+3t \\
Y_t = Y_t^* (1+(0.2 (\sin t)) \\
B_t=B_t^* (1+(0.4 (\sin t)) \\
$$
And take B* to be the following, but is unknown:
$$
B_t^*= \alpha Y_t^* \\
$$
I've figured the best way to estimate B* is the following:
$$
\hat{B} _t^*=B_t (Y_t^*/Y_t )^{0.4/0.2} \\
$$
But I can't figure how it works. Can anyone provide a step-by-step? Also why is it not a perfect estimate?

3 knowns

Estimate of unknown


texts: Equality of ordinal vs. cardinal utility under transformations - who made the distinction first?

texts:
In the context of preferences among items or choices under certainty, we can consider ordinal value function (viz., utility functions) to be equivalent under monotonously increasing transformations $u(x)\equiv F(u(x))$ for strictly increasing function $F$, but cardinal value functions only under linear transformations, i.e., $u(x)\equiv a u(x)+b$ for positive $a$ and constant $b$.

For adding a reference to an article in the philosophy of economics, I'd like to know who showed this the first time and where? Von Neumann and Morgenstern (1947)? Debreu (1960)? Or is this just "folklore"?

I'm aware of the history of utility in economics, the cardinal approaches of 19th century and the switch to ordinal representations by Pareto, Samuelson, etc. But I can't find a good "first" reference for the above distinction.


texts: Any study on performance gap between optimal mechanism and linear mechanism?

texts: In mechanism design, the optimal mechanism is usually not linear in the agent's type. However, linear mechanisms are easy for implementation. Are there any studies on the performance comparison between optimal and linear mechanisms. I guess a theoretical comparison is probably hard, as the payoff in the linear mechanism does not have closed-form, but a numerical analysis is not very difficult. Thanks.


texts: Mathematical derivation of the Production Possibility Frontier

texts: What are the mathematical basics of production possibility frontier? How can I derivate it? Can I have an example for it?


texts:
I follow some Japanese based websites, and I've read that "Japan population is going to reduce by half in 50 years". The estimates in this article are more optimistic, according to the graph it seems to estimate around 30 millions lose in population in the same period of time.

Then, I looked into this chart in Wikipedia about countries population growths. Some European countries like Spain and Portugal seems to have much worse population growth than Japan. Japan -0.12 , Spain -0.21 , Portugal -0.45 . Then I read this article, and they say Spain will lose 5.6 millions inhabitants in the following 50 years. This is proportionally a much lower figure than Japan, in spite of it is stated by that Wikipedia article Spain decreased much more than Japan in the period of 2010-2015 . I suppose many factors are taken into account for calculating population growth aside births and deaths such as immigration, emigration, etc.

Are there mathematical equations to calculate population growth? How are they predicted?


texts:
I have recently got myself confused about CIA and wondered if somebody could perhaps help me disentangle my thoughts. Consider the regression

$Y_i = \alpha_0 + \Delta D_i + \beta X_i + \eta_i$

Where $X_i$ are controls/covariates and $D_i$ is the treatment dummy. The CIA says that $\eta_i \perp D_i |X_i$. If this holds the causal effect of the treatment can be estimated with $E[Y_{1i} - Y_{0i}|X_i] = \Delta$.

Is the CIA the same thing as saying $E[\eta_iD_i] = 0$? (considering $\eta_i$ should have mean zero because a constant is included in the regression?) Which then is the same thing as $Cov(\eta_i, D_i) = 0$? How is this related to $E[\eta_i|X_i] = 0$ Gauss-Markov assumption? Does this have anything to do with the exclusion restriction for IV which looks very similar?


texts: How does this company gain from economies of scale?

texts:
Given this story, I am (my younger brother is) asked why (rather than how?) a particular company Pepper plc is likely to benefit from economies of scale.

In short, Jo has a shop that sells electrical goods made by Pepper plc, a large-scale business. Nearby, many people are unemployed so they can't really buy new stuff. However, they might be able to pay to repair their old stuff.

What exactly is the relevance?

Economies of scale is, from what I vaguely remember from introductory micreoceonomics (if I remembered, I guess I wouldn't be here) and understand on Investopedia, an advantage that comes from more production namely that if more of a particular product is produced, but only up to a certain point, any particular unit would cost less.

This is because fixed costs per unit decrease with more units, again, only up to a certain point.

Help please?

Note that for some reason we are talking about Jo's shop while we are asked about Pepper plc.

For reference, here is the whole story:


texts:
Does anyone of you could recommend me some good Macroeconomics and Microeconomics books based on your personal experience. I am an engineer and I do not have a background in Economics. I am planning to apply for a graduate school in Economics (MA if I am not qualified for a PhD as I already have a MSc in Engineering).

What would be the best way for me to learn some principles of economics and not to struggle if I get accepted into a graduate program while other graduate students have lots of experience and/or background in Economics? I just want to be on the same level with them at least during classes and be able to understand what is being given or taught.

I have looked it up on the internet, but people suggested all kind of books, but mostly intermediate and/or for those who already have background either in Economics or business related subjects.  The future graduate programs want me to have a background in Microeconomics , Macroeconomics, and Econometrics at least...


texts:
I asked this question on math.stackexchange but deleted it from there and brought it here.

I had a question about Constant Elasticity of substitution type preferences of the form: $$U=\int_{0}^{1}(c(\omega)^{\rho}d\omega)^{\frac{1}{\rho}}$$
 where the paramter $\rho$
  governs the degree of substitutability between goods. Here, $c(\omega)$
  represents consumption of good $\omega$
  which exists on the unit interval. As such, this type of preference specification aggregates over consumption of different goods.

My question is as follows. I have always thought of integrals of the form: $$I=\int f(x)dx$$
  as approximating sums of areas of infinitesimally small rectangles (in terms of their base) and heights being determined by $f(x)$
 . In the case of the example above, what really is $c(\omega)$
 ? Is it a function?


texts: Is the satisficing choice function rationalizable if the ordering isn't observable?

texts:
Edited: Say an observer observes only the choices made by the decision maker (and the sets from which these choices are made), but does not know the ordering. Then would the decision maker's choices still appear to be rationalizable (to the observer)?

Context from Osborne & Rubinstein (2020, Models in Microeconomic Theory):


texts: The USA debt and the individual investor

texts: There is a lot of hype about the national debt of the USA being incredibly large, and I wonder if this has any implications about an individual investor? I understand that the risk of having a large national debt is that the government may be unable to pay for its bonds. But if an investor holds only stocks of private companies, does he have any reason to worry about this? If so, what can an investor do to protect against this?


texts: Rebalancing an Input Output model to reflect a sudden production drop

texts:
Given a (balanced) MRIO, and assuming a known decrease % in productivity for a given region+industry, what would be the recommended way to rebalance the table to a new equilibrium?
Methods I can think of:

Uniformly decrease the Final Demands row for that region+industry by the given %, and rebalance transition + VA. → but the final gross output decrease will not be matching the FD decrease

decrease the Value Added column instead (and apply the same rebalancing method on the transposed matrix) → might be closer to reflecting the reality of a productivity decrease?

I have only ever seen mention of 1 (adjusting for different FD) in textbooks and papers on MRIOs…
Is either of these two approaches (or some other method) the favoured way to model a productivity decrease for a specific region+industry?


texts: European Commission getting rid of excess carbon emission permits

texts:
According to this Economist article,

For a long time after it was launched in 2005, the [European Trading System] barely functioned; a glut of allowances (which give the holder the right to emit an amount of greenhouse gases) kept prices close to zero. But after the European Commission sucked out excess permits in 2019, the market began to thrive.

the European Commission got rid of, so-called, excess permits.
What were these excess permits of carbon emissions?
Is it the amount of permits that are still up for sale (or to be distributed for free); and hence, aren't used?
And how did the European Comission get rid of them? Is it by decreasing the cap of overall supply of permits within the EU?
This article of the European Environment Agency designates the surplus of permits as a market stability reserve.
The Swedish Energy Agency, describes the market stability reserve as, a rule-based mechanism that enables the delivery of allowances to respond to changes in demand, thus maintaining the balance of the EU ETS.
It says

If the surplus of allowances on the market does not decrease to less than 400 million but if the price of an emission allowance for more than six consecutive months is three times higher than the average price over the last two years, up to 100 million allowances are injected into the market through an increase of auction volumes with units from the reserve.

Hence the number of allowances is dynamic, set according to the condition of the market. But isn't this ultimately limited by the overall EU cap that is decided politically? Also, what is the unit of an allowance?


texts: I have a dataset. How do I convert this data into Indifference Curves?

texts:
This is all hypothetical. I understand indifference curves. However, I don't understand how they are produced. I read this question, and the survey answer made sense to me...

Research Design: Indifference curves and budget lines

I read this paper...

http://people.ischool.berkeley.edu/~hal/Papers/2005/revpref.pdf

It talks about creating indifference curves from prices individuals are willing to pay for certain goods, household budgets, and time series data from aggregate consumption.

So, if I had a list of prices that individuals would be willing to pay for a unit of bread, and I had a list of prices that various individuals would be willing to pay for a unit of kale, how would I find the points for an indifference curve?

If I had household budgets where I saw how much each household paid for x units of bread, and y units of kale, how would I find the points for indifference curves?

Finally, if I had a list of years, and the quantities consumed of bread and kale in a region. How would I find the points for the relevant indifference curves?


texts: Mean Field/Differential Game and Measurability

texts:
Consider the following scenario. There is a continuum of players in a population, with population measure normalized to $1$. Each player has a type $\theta \in [0,1]$ and we suppose that $\theta$ is distributed according to a (nice) c.d.f $H(\theta) \sim [0,1]$ with full support. Write $\mathbb{E}_{H}\big[\theta\big] = \mu$ (where I am abusing notation somewhat by treating $\theta$ as an R.V.).

Each (infinitesimal) player may choose a random variable $X_{\theta}$ distributed according to cdf $F_{\theta}$ with support on $[0,1]$ subject to the constraint that the expectation, $\mathbb{E}_{F_{\theta}}\big[X_{\theta}\big] = \theta$. If we think of the realization $x_{\theta}$ as type $\theta$'s resulting type (which remember is random), then given the choices of strategies (R.V.s) by the other players, there will be a new associated population distribution of types $G$.

(EX 1:) For example, suppose $H(\theta) = \theta$ is simply the uniform distribution on $[0,1]$ and let each player choose the Bernoulli distribution with mean $\theta$. Then it is clear that $G$ is itself a Bernoulli distribution with mean $\mu$.

I have several questions:

How to formalize the aggregation of the independent random variables $X_{\theta}$?

From,
https://math.stackexchange.com/questions/414966/a-continuum-of-independent-random-variables , https://www.math.lsu.edu/~sengupta/7360f09/kolmogorov.pdf , and http://www.its.caltech.edu/~kcborder/Notes/Kolmogorov.pdf
it seems like the Kolmogorov Extension is what I want, no?

Given a distribution $H$, what properties must $G$ have?

For instance, it is clear that if $F_{\theta}$ consists simply of a choice of $\theta$ with probability $1$ $\forall \theta$, then $H = G$. Furthermore, if $H$ consists of a Bernoulli distribution with mean $\mu$ it seems equally clear that $G$ must be the same (we could never have a $G$ with support on the interior of $[0,1]$ since there are just two types $\theta = 0$ and $1$).

As EX 1 illustrates it seems like I can always "push" the distribution out, which reminds me of the notion of a balayage or sweeping. Hence, my intuition suggests that any $G$ such that $G$ is a mean-preserving-spread of $H$ is achievable. Any thoughts?

I am also worried that there may be measurability issues that I am glossing over.


texts: Arrow's impossibility theorem states that no social choice rule satisfies a certain list of desiderata. Amongst these are completeness and unrestricted domain. Could someone please explain the difference?


texts: Dimensional analysis for the qdf/quantile function corresponding to the pdf/CDF for the size distribution of income

texts:
I have previously posted a very similar question on Stackoverflow, but based on responses there I have decided that the real nub of my question is economic. I will give a longish introduction, mainly to distinguish what I know (introduction) from what I am asking (last 3 paragraphs, skip to it if you like).

Suppose I have a pdf f(x) or a CDF F(x) that represents the size distribution of income. Income is a flow of money (dollars or some unit of currency), per some unit of time, to particular individuals. I therefor think the proper unit of measurement is dollars per person-year.

In order for the probability to come out in dimensionless units, f(x) must be measured in person-years per dollar. Integrating this over x also yields a dimensionless share for the CDF because the units of an integral are the product of the units of the integrand y = f(x), here measured in person-years/dollar, and of the differential dx, here measured in dollars/person-year.

Integrating xf(x) therefore puts the units on the mean income in $/person-year; this seems reasonable.

From this I have drawn conclusions on the units and interpretation of the quantile density function q(y), quantile function Q(y), and the integral of yq(y)dy (i.e. the the inverse function analogue of the partial moment function of order 1) which if correct would be very helpful to me, but in which I have limited confidence. I’d be grateful if someone could confirm or deny these conclusions, perhaps in the context of some discussion/explanation of interpretation of dimensional analysis in the the context of distribution functions.

I believe the units of the y axis and of q(y) are necessarily the same as those in the previous pdf/CDF analysis, i.e. the y values are still measured in person-years per dollar and x = q(y) is still measured in $/person-year. This implies that integrals of q(y) over some interval in general, and Q(y) (which is equal to the integral of q(y) from 0 to y) in particular, are both measured in unitless shares. However (uncertain interpretation #1) F(x) is in unitless shares of total income, while Q(y) is in unitless shares of the population for a year.

Finally, (uncertain interpretation #2) this would have the integral of yq(y)dy in units of person-years per dollar. But I am having trouble interpreting this. The corresponding x quantity is the mean (or for a bounded x, the partial mean) of income per person-year. So this would be the mean number of person-years--for what? for a single dollar? for the mean income?

Consider the truncated version of this function, where the integral of yq(y)dy from zero to q* is divided by F(q*). The corresponding truncated function of x yields the mean for those with incomes of x* or less, and $/person-year seems like reasonable units for a mean income. But I want the the y version to come out in number of people, or number of person-years, corresponding to the share of person-years over the same interval, and the "per dollar" in the denominator, which I need to make the CDF(x) and Q(y) unitless, does not have an interpretation which is obvious to me.


texts: Economics of Homelessness: Are housing prices to blame?

texts:
Lots has been written in terms of the social context of homelessness. Often attributing the causes due to mental illness, previous criminal activity and addiction.

I've been wondering, how much of a role (if any) does home price or rent play into the phenomenon of homelessness?

Im guessing estimates will be different depending region, but I'd like to know if the relationship is consistent across the board.


texts:
I have an interest in financial economics, and I plan to take the graduate sequence, however I did not take an undergraduate course in that field. I would really appreciate it if someone could recommend a textbook for financial economics. I would prefer the book involved calculus, so I can get the fundamentals of problems (such as asset pricing) I may see in the future.

Two books which have been recommended to me are: "The Economics of Financial Markets" by Roy E. Bailey and "Principles of Financial Economics" by LeRoy and Werner. Are either of these worth reading?


texts: Can PPP adjusted values be compared over time?

texts:
I'm a little baffled about this:
Let's say I want to compare the average income of 2 countries, A and B. Of course I'm interested in the real income so I adjust to PPP using the big mac index of that given year (dividing the average salary by some constant).
Now I do it again, but 10 years later (with the big mac index of t = 10).

Question -
Can I compare the adjusted average salary of country A, t=0  to the adjusted average salary of country A, t=10?

One can argue that no, because the index used for PPP adjustment changed over time, so we need to take account for this. That's why when you adjust for inflation you have specify to which year the prices have been fixed.
You can't compare a real salary adjusted to 2003 prices to a real salary adjusted to 2013 prices.

My logic says yes, because assuming that McDonalds hasn't changed their Big Mac over the past 10 years, the unit of choice remained that same - one delicious burger and it's NOT like adjusting to inflation (in which you have to randomly assign a base year).


texts: Applications to Green's Theorem in Economics?

texts:
I was wondering about possible of application of integration to economics (other than welfare), more specifically, how might Green's theorem be useful for an economist?

Let C be a positively oriented, piecewise smooth, simple closed curve in a plane, and let D be the region bounded by C . If G and H are functions of (x,y) defined on an open region containing D and have continuous partial derivatives there, then

$$\oint_C{(G\ dx + H\ dy) = \int\!\!\!\int_D {\left({{\partial H} \over {\partial x}} - {{\partial G} \over {\partial y}}\right)\ dx\ dy} } $$

where the path integral is traversed counterclockwise.

The idea behind this theorem is that if you have a line integral in two dimensions, then Green's theorem can be used to compute the integral:
 Green's theorem transforms the line integral around a simple closed curve $C$ into a double integral over the plane region $D$ bounded by $C$.


texts:
Let us consider a perfectly competitive one-period production economy consisting of one firm, N>0 household(s) and one government. Each household is endowed with x unit(s) of physical capital and with h unit(s) of time that can be allocated to work: e and/or turn into leisure time: l at a rate of one for one. The preferences of the representative household are represented by the following utility function:

commodity is produced by the single perfectly competitive firm using the following Cobb-Douglas production function:

$$Y=AK^{\alpha}H^bL^{1-\alpha-b}$$
where Y denotes the aggregate level of market production, K represents the aggregate level of private physical capital, H represents the aggregate level of public physical capital, L stands for the aggregate labour input defined as the total amount of time allocated to work, and ,b ∈ (0,1), A>0 are parameters. The firm rents from households both labour at the real wage rate w and physical capital at the real rental rate . Each household earns a real dividend income that corresponds to a fraction 1/N
of the firm’s profit P , pays a physical capital tax t $\in$(0,1) proportional to his real
physical capital income. Let us assume that a fraction  ∈ (0,1) of the total tax revenue T is invested into the public physical capital:  =  and a fraction 1 −  ∈ (0,1) is consumed by the government:  = (1 − ).

My question

  Would production possible without the government: t= 0? Do households have incentives to rent the physical capital to the firm if t= 1?

I wrote the governemnt’s revenue = $T= t(NρΧ)$

And then I think to use laffer curve to answer this question.

For example

when t=0, T=0, so H=0 so Y=0. There is no production.

When, t=1, T=NρΧ so H>0 and Y>0

And hh’s phisical capital revenue=(1-t )ρX. So when t=1, there is no revenue for households. So they don’t want to rent their physical capitals.
In order to find optimal $t^*$

I need to maximize $T= t(NρΧ)$ w.r.t $t$. But I could not get any reasonable value.

——

An edit:

Should I consider X depends on t here. That is X=X(t)

Then    $$ \max tNρΧ(t)$$ subject to $t$.

By FOC. NpX(t)+tNρΧ’(t)=0

There exist $t^*$ such that $NpX(t*)+t^*NρΧ’(t*)=0$ Holds.

Is this way correct? Or

How can I solve this question?


texts: Does a strong exchange rate always mean a cheap holiday regardless of where you are from and going?

texts: As question title states, does going from one country with a much stronger exchange rate, or a moderately higher exchange rate, in comparison to a country you visit always mean you get more bang for your 'buck'?


texts: Are there any mainstream economic models that rely on conic optimization to solve for decision variables? Conic optimization is a type of convex optimization problem, different from linear and quadratic programming. Any leads would be helpful


texts:
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 buys them) and directly printing money? If any. If there is no difference, then why would a government chose one way or the other?


texts:
I was recently introduced to the concept of cardinal utility. In real life, how do we assign these utility levels? For example if i wanted to assign numbers to my own utility indifference curve for two things, how would i go about it? What happens if one of the things is not exactly measurable in terms of quantities on an individual level? For example lets say the two things i am considering are convenience of traveling by car to air pollution, then how would i go about it?
I have tried to look on the internet and i have come across some techniques like time-trade off, but these are mostly used in measuring health related aspects which can still be imagined/estimated in mind. This is related to a project, so i am looking for simple feasible methods that i can use to estimate my own preferences, and not something complex like neuro imaging etc


texts: Does the UK have a trade agreement with Australia?

texts: Since the UK was a member of the EU, I'm assuming the EU was responsible for any kind of trade arrangements between the UK and Australia, but I'm not entirely sure. Does the UK have an agreement with Australia for trade and if so, when did this agreement take place? Many thanks.


texts: Local vs. foreign currency denomination for Emerging Market Bonds

texts:
For emerging market governments, why is it safer to issue bonds in local currencies than in foreign currencies to raise money? Given that both are invested in by foreign investors, couldn't both potentially lead to exchange rate risk and currency fluctuations, say if there is a sell-off?

I was confused about this while reading 'Pragmatic Approaches to Capital Market Liberalization' (2008), a paper by Raghuram Rajan and Eswar Prasad. It comes up on page 13.

I tried looking at Investopedia and a Financial Times article on the topic of emerging market bonds, but they seemed to look at it from the perspective of investors and not public policy (I'm not suggesting its a tradeoff but maybe there's different perspectives, I thought).

https://www.investopedia.com/articles/03/073003.asp
https://www.ft.com/content/56cb690e-c6a8-11e1-963a-00144feabdc0

Thank you for your help! I would really appreciate if to the extent possible, the answer is in layman(ish) terms.


texts: How can banks pay interest to the central bank?

texts:
If the central bank is the only institution that can increase the monetary base (create both, digital and paper money), how can any institution that borrows from it (mostly banks) satisfy its interest requirements? In other words, how can you pay back more than what left the central bank?

A dumbed down example would be: Only I can create money, I (the central bank) loan you (the banks) 10 dollars expecting 11 dollars back (10 dollars principal + 1 dollar interest). Where will you get that 1 dollar from to pay me the interest if there are only 10 dollars in existence?

This question can be easily answered if there were any way in which new money can leave the central bank without being paid back. Are there such transactions I don't know about?


texts: oTree: How to have unequal groups sizes, with agents ocasionally sitting out rounds

texts:
I'm designing an experiment that investigates the result of different groups sizes on the outcomes of Nash Demand games.

I already programmed this experiment once in zTree, where we then conducted the experiment in a laboratory environment. Now, I'm looking to transfer this over to oTree ("a Django-based framework for implementing multiplayer decision strategy games."), and to conduct online experiments with Amazon Turk.

Here's the problem I've run across: How do I set up games with unequal groups sizes, where the groups are interacting (exclusively) with one another, and so players from the larger (majority) group will occasionally sit out rounds.

The groups will typically be middling in size (say 6 in a majority group, and 2 in a minority group), but let's consider the simplest case: The larger group has 2 members, and the smaller group has 1 member, and in each round members of each group are chosen at random to play the Nash Demand game against one another.

So, letting Player 1 be in the minority group (G1) & Players 2, 3 be in the majority group (G2), a matching sequence might be:
Round 1: Player 1 (G1) plays with Player 2 (G2),
Round 2: Player 1 (G1) plays with Player 3 (G2),
Round 3: Player 1 (G1) plays with Player 3 (G2),
and so on…

For this kind of random matching, notice that players in the majority must occasionally sit out. In the example, Player 3 sits sat out in Round 1, and Player 2 sat out in Rounds 2 and 3. Here, the minority group member, Player 1, will ultimately play twice as many rounds as the majority group members.

In zTree, I was able to do this by importing a spreadsheet that contained the matching data--about which player was to be matched to which other player in each round--into the Parameters Table in that environment. My problem is that it is not clear how to accomplish the same thing in oTree.

I'm aware that I can establish group sizes in models.py as follows

class Constants(BaseConstants):
players_per_group = [x,y] # Where x, y are the Minority and Majority group sizes, respectively.

And I'm aware that I can establish constants that could correspond to the matching parameters in the same class, but there will typically be eight players playing 120 rounds of the game. That would require at least 480 unique ordered pairs to specify. And this will also change from experiment-experiment, as we will change group sizes. That would be impractical to hand-code.

I already have the spreadsheets (.csv files) with the appropriately randomized matching tables from the previous experiment. Is there a way I can get oTree to read those spreadsheets and conduct the matchings based on those values?

And suggestions of how to proceed would be greatly appreciated. Cheers & warmth.


texts: Perturbation Constraints for Excess Demand

texts: It is my understanding that for regular economies, equilibrium indices and number are preserved under perturbations, typically conceived as some point-wise translation. Does this hold under any transformation to a sufficiently close homotopic path?


texts: Can the supply curve shift while the PPF does not shift?

texts:
Can the supply curve shift left while the PPF remains unchanged? For example, if I am a blue berry farmer and I injure my leg, I can no longer pick as many blue berries. So in the blue berry market, the supply curve for any price would shift to the left.

The number of blue berries I have available to pick hasn't changed, therefore the PPF NOT shift but instead I wouldn't be producing along the PPF but inside the PPF. So, the supply curve has shifted left, and my position on the PPF is on the inside of the curve, but the PPF itself hasn't shifted. Is that correct?

If so, my follow up question of the same topic is: is it true that the PPF does NOT concern itself with the method of using resources, just the resources themselves? E.g. if a factory burns down but the stock of resources that goes through the factory remains unaffected, the supply curve would shift and the PPF would remain unchanged. Correct?


texts: What does the following mean: "supply has positive elasticity”?

texts:
What confuses me in particular is that I always thought of the concept of ‘elasticity’ with respect to something. That is, supply of x can be elastic with respect to y.
Am I missing something?


texts: Depreciating companies intangible assets

texts:
Companies intangible assets are something which is not physical e.g. Patents, copyrights etc.
How can we depreciate companies intangible assets and why it is done?


texts: Would you consider airport parking to be a monopoly or a monopolistic market?

texts: If you look at it one way and group the different companies that offer parking, it could be a monopoly as that is the only place you can park. On the other hand, the different companies offer different prices and consumers can substitute.


texts: What is the economic interpretation of this utility function?

texts:
I have a utility function $U(c,l)={{C^\alpha-1}\over {\alpha}}+{{l^\alpha-1}\over {\alpha}}$ where C denotes consumption, l denotes leisure. What is the economic interpretation of the term $\alpha$ ($\alpha<1)$? Does changes in $\alpha$ affect the economic interpretation of the utility function as a whole?

The full problem is to derive the optimal labour supply. I get the answer $L={{1}\over {1+[w(1-t)^{{\alpha}\over {\alpha-1}}]}}$ where t represents  the tax rate. I am trying to understand the effect of $\alpha$ on the labour supply as I increase the tax rate $t$. How can I intuitively explain the role of $\alpha$ in this case?


texts:
Why do different countries have different currency?

 I have this question because I want to know why to divide it? If it's not divided then we can easily use the money anywhere and we won't need to use currency exchange.


texts: intertemporal utility function usage : calculating consumption

texts:
I have encountered this a lot in my exams and can not seem to understand how to use these functions here is an easy exemple :

A consumer who will only live 2 periods receives 1000€ in the first period and 5000€ in the second period, if the interest is at 0% how much will he consume in both periods knowing that his utility function is :

  U(C¹,C²) = 3×C¹×C²

Where C¹ is the consommation of first period and C² of second.

How do I make use of this utility function to calculate the consumption in both periods  ?


texts: Is market failure constant? What properly defines it?

texts:
My textbook defines market failure as when "the production or consumption of a good or service causes additional positive or negative externalities on a third party not involved in the economic activity". That being said, I'd like to ask, Don't all activities produce externalities? For example, the production of oil will always have negative externalities, no matter how the government intervenes. Thus the market will always fail.

Now perhaps I misunderstood. Perhaps it means whenever there are any net externalities (positive - negative), the market fails. Please tell me if this is right.

Furthermore, from what I've read, I've gathered that the market fails whenever social cost $\neq$ social benefit. But this is a different definition from the one I previously mentioned (the one only dealing with externalities).

Please tell me what market failure actually represents. Does it take into account social costs and benefits? Or only external costs and benefits? And if it only takes into account externalities, will some markets fail continuously (like consumption of oil)?


texts: How does Net Foreign Assets (NFA) differ from Net Foreign Investment (NCO)? Yes, the former counts assets, and the latter counts investment, but I can't quite wrap my head around the difference.


texts: Why are asset pricing models equilibrium models?

texts: I have several times heard scholars refer to asset pricing models (such as the CAPM) as a type of equilibrium model. Why exactly is this the case? Does this simply mean that equilibrium is a necessary condition we need to accept for the model relationship to hold? Can this be shown formally?


texts: Missing trade and FDI data in Time Series

texts:
I want to run a panel VARX and some of my variables are bilateral trade and between countries in sub-Saharan Africa and China as well as FDI. Unfortunately the data I could find from official Chinese records only begin in 1992 and 2003 for trade and FDI respectively.

I am aware that there is data available at COMTRADE and UNCTAD. However, the data from UNCTAD does not describe the source of FDI for data before the 2000s. COMTRADE data varies significantly from official Chinese records because not all countries, especially in developing regions, follow the same reporting standards. For consistency, I prefer to use the official Chinese records.

As much as I wanted to consider a large time frame, due to data availability, I will only consider 1990-2018. As such, I am missing 2 years for trade data and 13 years for FDI data. In some cases, data entries begin with 0 and remain 0 for a couple of years before non-zero numbers appear. So in theory, data points before will also be 0. However, I am not so confident in this logic. Looking at other research, it seems people avoid this problem by shortening their time series or imputing data.

I am wondering how I can balance my data? Is there anyway to impute at least some of the data by deriving it from trade/FDI between SSA and the rest of the world for example? Or if there exists other data bases.

PS: Sorry if this is in the wrong section!


texts: Are equity prices and stock prices the same?

texts: Do we use in common language "equity price" as a synonym to "stock price"?


texts: Why is food less expensive in India than the United States?

texts: India has 4x the population, less land, and far worse technology and infrastructure than the United States. Shouldn't food cost in the US be less expensive? I've never been to India, but it seems like food costs far less there from what I see on TV (10 cents a meal). Why is this?


texts:
Is there an academic consensus on whether a trade deficit is good/bad or neither?

And if that country is in a monetary union, does the answer change because the wealth moved out of the country can be utilised elsewhere (whereas, for example, a pound can only be used as legal tender in the UK)?


texts:
I am a student in an intermediate microeconomics class and am having a little trouble understanding the marginal rate of technical substitution. I understand that it represents the amount that labor (capital) has to be decreased for capital (labor) to be increased and stay on the same isoquant, but I am having trouble understanding it in practice.

For instance when the MRTS = K/L and capital is 4 and labor is 1 than the MRTS is 4/1. Does that mean that mean if capital is increased by 4 units then labor has to be decreased by 1 unit to stay on the same isoquant? Or does it mean that mean if capital is decreased by 4 units then labor has to be increased by 1 unit to stay on the isoquant? Or am I way off in my understanding?