Reduction of compound lotteries seem to be incorrect?
Economics Stack Exchange
by High GPA
2h ago
Wikipedia reads: I feel that this axiom is much stronger than the usual "axiom of reduction of compound lottery" that we talk about because the Axiom 4' sufficiently imply EU (with weak ordering and continuity). Is this Axiom 4' same as the original reduction axiom for example one mentioned in Samuelson 1952 ..read more
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On what macroeconomic modelling the Reform Resolution of the Third Plenum of CPC is based?
Economics Stack Exchange
by TomR
2h ago
The Third Plenum of the Central Committee of the Communist Party of China concluded with the Reform Resolution http://en.qstheory.cn/2024-07/19/c_1006368.htm which (while not available in full AFAK) details around 300 policy issues and which will boost new productive forces. My question is - are Party institutions or affiliated institutions making macroeconomic modelling before embarking on such resolutions and policy measures? Are such modelling available (I can also read Chinese if someone can suggest sources) and is such modelling different from the macroeconomic modelling of the capitalist ..read more
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- Economics 101
Economics Stack Exchange
by Bader
2h ago
Greetings fellow scholars, I hope you are having a great day. I have questions about learning economics, is it possible to learn it while studying math? If possible what books do you recommend? I'm looking for books that teach the fundamentals and explain them without any use of mathematics. Your help and time are greatly appreciated, thank you very much ..read more
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Missing money problem: Can we keep the lights on?
Economics Stack Exchange
by Jesper Hybel
1d ago
In the electricity sector a major political concern is reliability captured by the phrase 'keeping the lights on'. This has led several countries to create capacity mechanisms of different sorts for example in the form of capacity markets. Generators are paid not for their production of electricity but rather for their promise to have ready a certain amount of capacity. Free markets are assumed incapable of delivering reliability due to what is commonly referred to as the missing money problem. The missing money problem arise when peaker plants are not sufficiently rewarded on wholesale market ..read more
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Relationship between drop in inflation rate vs. increase in unemployment rate (and vice versa)
Economics Stack Exchange
by HelloDarkWorld
1d ago
I've read that inflation has historically had an inverse relationship with unemployment. This means that when inflation rises, unemployment drops. Higher unemployment, on the other hand, equates to lower inflation. When more people are working, they have the power to spend, which leads to an increase in demand. And prices (inflation) soon follow. The opposite is true when unemployment rises. Why does when higher unemployment equates to lower inflation? I mean more people can be unemployed, but the Fed can still raise interest rate to drive inflation down. How do these two related? (Also, does ..read more
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Inflation effects of linear income tax with grant
Economics Stack Exchange
by EmmanuelMess
1d ago
I have been reading The Theory of Taxation and Public Economics by Kaplow. A linear income tax is described by the function: $$T(wl) = twl - g$$ where t is the marginal tax rate, $wl$ is the income for some labour and $g$ is a grant given to people that earn $0$ ($T(0) = -g$). I am curious to know if there are studies of inflationary effects of the grant (where $T(wl) < 0$) in an economy that only has income tax. Because of consumption preferences being different for lower income indiviuals, and because of correlations between income and ability to do work, my intuition says that there coul ..read more
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Who holds European Government Bonds
Economics Stack Exchange
by Questaware
1d ago
I see that the ECB holds Euro 2500bn of government securities. I understand that the nations also have central banks so how does this work? Looking at https://www.caixabankresearch.com/en/economics-markets/public-sector/challenges-and-outlook-portugals-public-debtreflections-withdrawal I see that since 2014 Banco de Portugal purchased 33% of government debt since 2014 Where did Banco de Portugal get the Euros to buy these bonds? Did they borrow them from the ECB? Are the ECB holdings of Portugese bonds additional to this? I see that most European countries have central bank holdings of governm ..read more
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Would Prices start dropping , say 50% if the government took back 50% of the trillions of dollars printed the last several years in the US economy?
Economics Stack Exchange
by Terrance Magnumb
2d ago
If printing trillions of dollars causes prices to go up, would taking those trillions back cause prices to drop ..read more
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What constitutes as eligible reserves? [closed]
Economics Stack Exchange
by Mohanish Narayan
2d ago
My question is as follows: [1] According to this wikipedia article: https://en.wikipedia.org/wiki/Bank_reserves "Bank reserves are a commercial bank's cash holdings physically held by the bank,[1] and deposits held in the bank's account with the central bank." [2] Also according to this article: https://en.wikipedia.org/wiki/Monetary_base "The monetary base (also base money, money base, high-powered money, reserve money, outside money, central bank money or, in a country is the total amount of money created by the central bank." [3] But according to this https://en.wikipedia.org/wiki/Money_cre ..read more
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On assumptions of local projection method
Economics Stack Exchange
by zyy
2d ago
It is well known that Jorda(2005) proposed the following model called local projection: $$y_{t+h} - y_{t-1} = \beta_h shock_{t} + \gamma_h ctr_{t-1} + \epsilon_{t,h}, h = 0,1,2,\dots,H.$$ I am trying to calculate AIC for such a model. To do this, I have to calculate the likelihood function, which in turn relies on the joint distribution of $\vec{\epsilon_t} = (\epsilon_{t,0},\epsilon_{t,1},\dots,\epsilon_{t,H})$. I guess that $\vec{\epsilon_t}$ has some $H+1$-dimensional Gaussian distribution since we usually estimate this model by OLS. But I have no idea how to determine the variance-covarian ..read more
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