Ask an Economist
A shorter way to ask this would be is if there is a true economic incentive to build roads when the government says that they will pay for it anyway.
Answer when you can. Thank you!
Private developers will identify profitable opportunities from constructing toll roads; the current road system may be too congested or outdated, or an undeveloped route may have potential to be lucrative. Typically, proposals made by individual...
I found a policy report that might be a little dated (2013) but I think is probably still relevant. You can find the report here: <https://fas.org/sgp/crs/misc/R41897.pdf>
The...
As many observers have noted, economists are not especially good at forecasting the future. Nonetheless, intellectual trends generally move slowly. So I would expect that the issues economists deal with in the next twenty years will look a...
value of securities held at central bank = amount of central bank money.
If the value of the securities rise, then the Fed needs to increase the amount of central bank money, which it does by passing its "profits" to the US treasury. Normally, the securities held at the Fed are US Treasury Notes, but starting with the Great Recession, the Fed began accumulating mortgage backed securities as well. Ultimately, these securities gave a profit, and these were passed on to the US treasury like always. However, what if that was not the case? What if these securities defaulted, and the Fed incurred a "loss"? Would it have to pass the loss onto the US Treasury as well? What would that look like? Would the US treasury simply give the Fed US Treasury Notes without getting central bank money in return?
The following FEDS Note by Bonis, Fiesthumel, and Noonan (2018) provides detailed answers to your questions: https://www....
There is a large body of research that shows that peers matter for later academic and economic success. A prominent study in which children were randomly placed in kindergarten classes showed that children who were placed in schools with...
Here are some quotes from her book: “He took no pity on local companies and removed even more trade barriers; the result was the loss of 177,000 industrial jobs between 1973 and 1983”
“Pinochet had deliberately sent his country into a deep recession, based on the untested theory that the sudden contraction would jolt the economy into health”
“In the first year of Friedman-prescribed shock therapy, Chile’s economy contracted 15 percent, and unemployment- only 3 percent under Allende— reached 20 percent, a rate unheard of in Chile at the time”
“He calculated what it meant for a Chilean family to try to survive on what Pinochet claimed was a ‘living wage’. Roughly 74 percent of its income went simply to buying bread... by comparison, under Allende, bread, milk, and bus fare took up 17 percent of a public employees salary”
“In 1974, inflation reached 375 percent- the highest rate in the world and almost twice the top level under Allende”
So I’d like to ask;
1) are there any statistics/ data that contradict these claims, or maybe give more context to them
2) was Pinochet’s “neoliberal experiment” really an example of neoliberalism? And if it was, was it a failure?
Also,
1) was the economy under Pinochet really that terrible
2) if it was, was it due to the pushing of neoliberal ideals by the Chicago boys (those educated at the Chicago school of economics)
3) is Chile proof of the failures of neoliberalism
My name is Marcelo Oviedo and used to work as Assistant Professor at Iowa State University. My ex-colleagues in the Department of Economics have invited me to answer your questions posted in the Ask An Economist section in that...
I have a few questions;
1. Will canceling my debt negatively impact my credit score?
2. Will I be able to get future student loans if I want to go to graduate school?
(The process states that I WILL be able to get those loans if I waive some stuff and agree to have my old loans reinstated). But my question is more basic:
will anyone give me a loan?
References;
studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/disability-discharge
https://www.insidehighered.com/news/2019/08/22/trump-administration-grant-disabled-veterans-automatic-loan-forgiveness
1. The most common credit score is of the form used by FICO (Fair Isaac Corporation). The calculation has five components, payment history, amount owed, length of credit history, new credit, and type of credit used. The first two...
For such a strategy to work at the least following two conditions must hold:
- each time you transact, you need to correctly pick a stock that would eventually rise in price by enough to offset the bid-ask spread and transaction fees you...
Does economics provide any model by which one can infer anything about actual selling prices for something, based only on data obtained from published asking prices? For example, if we had a data set of ~3000 sales over 20 years, and we knew that asking prices in real dollars were basically flat, would that tell us anything about the selling prices? Would they also be flat? Or maybe instead would they be gradually approaching the asking price? I have no idea.
Thank you.
The question you are asking is about the bid-ask spread. The bid is what a buyer wants to pay for an item. The ask is what the seller wishes to receive. You know the ask, you want to know the bid. The bid would be demand, the...
Thaler and Sunstein in their book define nudge as “any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives.”
...Purchasing a vehicle from an American car company that is mostly manufactured overseas with foreign parts
Or,
Purchasing a vehicle from a foreign car company that is mostly manufactured in the US with US made parts (list for reference: https://www.usatoday.com/story/money/cars/2018/06/22/american-cars/724724002/)
This question addresses an important debate in the current economic climate in which global production network and offshoring are prevalent. Economic research on this topic from both theoretical and empirical aspects is vast and is still ongoing...
Economists and economic historians in particular have been quite interested in the economic impacts of slavery and its aftermath, including the effects of race-based discrimination. There is by now an extremely large and extensive literature of...
The unusually shaped yield curve was in the news the other day. But it was attributed to the Fed buying 10-year T-notes, which temporarily lowered their yields relative to notes/bonds with shorter maturity. It sounds to me the quote cited by...
Trumps tariffs are collected by U.S. customs officials when Chinese goods are imported into the US. They are not collected on goods imported from Japan. However, the tariffs have created worldwide perturbations and there may be modest second...
I'm reading through this paper and while I can think of reasons why some of the conclusions might be true I don't get how empirically they are reaching their conclusions.
1) According to page 16 item #23 "The empirical results show that inequality has a negative impact on economic growth. The baseline results are reported in columns 1 to 4 of Table 1" and then goes on to explain its reasoning why inequality negative impacts growth and says "Based on the estimated coefficients in column 1, for example, lowering inequality by 1 Gini point would translate in an increase in cumulative growth of 0.8 percentage points in the following 5 years".
2) In item #29 (page 19) they go on to say "Taken together, these results suggest that inequality in disposable incomes is bad for growth, and that redistribution is, at worst, neutral to growth". Again while I can think of some reasons why this may be the case (and some reasons why it may not like if some of the wealth leaves the country so as not to get redistributed depending upon implementation) I'm not sure how they are coming to that conclusion empirically.
3) Then several times they estimate what the impact on growth would be for every % change in the Gini index but I'm not sure how they built that numerical assumption.
I came across the paper because I was trying to do some simple research into whether income inequality can lower the velocity of money (though so far I've just pulled some data from FRED on MZM and the Gini index and found like a -.46 correlation.
I'm hoping I could learn from someone to better understand how the tables this paper provides actually translates into the conclusions they claim; I don't know how to properly interpret the tables.
https://www.oecd-ilibrary.org/social-issues-migration-health/trends-in-income-inequality-and-its-impact-on-economic-growth_5jxrjncwxv6j-en;jsessionid=g-XlVT6DTb4_r_CW_3M5veza.ip-10-240-5-57
Thanks!
Christopher
1) According to page 16 item #23 "The empirical results show that inequality has a negative impact on economic growth. The baseline results are reported in columns 1 to 4 of Table 1" and then goes on to explain its reasoning why inequality...
The term you are looking for is product differentiation. This is the name we give to a class of models (most prominently, the Hotelling linear city and Salop circular city models) where firms may have identical production costs and competition is...
The challenge in describing a large economy with more than 300 million people in it is in finding helpful ways to simplify the data. Economists often measure economic performance by using one very simple statistic: income per capita, which...
For consumers, changes in prices and per capita income are influential determinants of demand. Consumer demand is often measured as an elasticity, which is a relative measure, providing a useful means of comparison across all ranges of quantities...
In theory, a stiff and swift increase in the minimum wage may result in less employment (of minimum-wage-eligible workers) and may increase prices to some extent as firms pass on higher wage costs to their consumers. But it does not follow that...
Some of it is read by computers and some by humans. An online marketplace like Amazon's Mechanical Turk, employs millions around the world (including the U.S.) to work on these tasks at wages of 5 cents an invoice. The argument can be made that...
Since I am not an economist, I am asking out of curiosity, not criticism and would like to better understand this situation. Thank you for your consideration and any response.
Yes, there is a potential for double counting---in the case of publicly traded companies included in the SP500 that are also held in the Berkshire's portfolio (e.g., Apple or American Express). The extent to which this may skew any ratings or...
Cheers,
Abe
On January 29, 2019, Meat and Livestock Australia (MLA) released updated forecasts, the general link is:https://www.mla.com.au/...
Alexander Hamilton was, as the musical portrays him, an influential figure in the early history of the United States. A full description of his views about and impact on financial arrangements in the newly formed United States would be well...
The easiest way to see the connection between Month on Month Inflation and Year on Year inflation is to take a step back and recall where these numbers are coming from.
The inflation numbers we see reported are reflecting the...
Also, who carries out these imports/exports or who decides it's better to import/export certain products? Is it private sector industries or is it government influenced.
So back in the previous examples of USA producing planes and China producing Electronics both with comparative advantages over each other. We know in real world examples Boeing in the USA produces planes and Huawei in China (along with many others) produces Electronics.
Does this mean Boeing should export planes to China, but what has this got to do with the Huawei company in China? They don't necessarily care about planes at all? Their business is electronics?
Does it also mean Boeing should use Chinese electronics on their planes (which I'm sure they don't)? This is where I am struggling to see the real world examples of it all, and understand WHO works out what products should be Imported/Exported from specific countries etc.?
Also who works out what country would be best to import goods from and what countries are best to export goods to?
I live in Ireland, and obviously dairy farming and beef are big exports here. But is it down to the individual farmers to understand these economics, or would the government figure a lot of this out?
Prices will drive the system. For example Ireland has a comparative advantage in cheese and butter due to climate and a large amount of land suitable for dairy cows. China has a comparative advantage in electronics because it has an...