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How Do Economists Quantify Contagion?

In the context of international financial crises, what mathematical methods have Economists employed in order to quantify financial contagion? Note: For a working definition of contagion I’ll use the description supplied by Kaminsky, Reinhart & Vegh (2003): We refer to contagion as an episode in which there are significant immediate effects in a number of

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Applied Chaos to Economics

Just a question to satisfy my Mathematical itch, but is there anything in Economics that uses Chaos Theory from Math?      Somewhat related economics.stackexchange.com/questions/212/… – Martin Van der Linden Jun 24 ’15 at 5:56 — 3 Answers 3 If you’re into growth economics the Nonlinear Dynamics in Equilibrium Models (Eds. Stachurski, Venditti, Yano) collection might

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What is the difference between contract theory and mechanism design?

Can someone explain the difference between contract theory and mechanism design? — 2 Answers 2 Contracts are a subset of all mechanisms where agreements are enforcable. An example of a mechanism that is not a contract: A second price auction (or Vickrey auction) is truth-telling mechanism where the enforcability of contracts is not required. In

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Does Abatement Cost Mean Cost of Reducing Emissions with Output Held Constant?

In the economics of pollution control, frequent reference is made to ‘abatement cost’ and/or ‘marginal abatement cost’. Is it normally implicit in the use of these terms in economics that output is held constant? In other words, that the cost referred to is the cost of reducing emissions while producing the same output? Common &

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OLS bias in demand estimation: the bias always underestimate the demand’s elasticity?

Some papers argue that OLS can produce less bias than IV estimation depending on the quality of your instruments. Suppose we consider a demand estimation equation. Suppose the demand elasticity is negative in OLS. By my intuition weak instruments should produce biased estimates towards OLS, but no less negative. Can you guys produce an example?

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Hedging with volatility swaps?

I’m studying financial derivatives, and became curiosity in volatility products, more specifically volatility swaps. It always intrigued me how can you create products based on volatility. Who is interested in buying them? Other than traders who want to speculate with the volatility I can’t image how a large corporation could find a seller/buyer for this

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Why do stock exchanges not operate at a fixed frequency?

Would this not be more fair towards traders who don’t trade at high frequency? And would it not be possible to distribute this fixed frequency to other exchanges, modulo relativity? The reason I’m asking is because I recently learned that high-frequency traders are beating inter-market sweep orders. 3   The problem could still persist, because

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Why shutdown the banks (Greece)?

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. 3   en.wikipedia.org/wiki/Bank_run – Anton Tarasenko Jun 29

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What is the calculable effect of counterfeiting on an economy?

I’m curious whether one can numerically calculate the effect that counterfeiting has on an economy. As I understand it, counterfeiting essentially amounts to theft of the wealth of everybody holding units of that currency. For example, say you have an economy with 100 units of currency currently circulating. Bob creates 100 fake units of currency.

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In what sense are “new-Keynesian” models “new” and in what sense are they “Keynesian”?

Hopefully, the title of this question is quite descriptive. Whilst I have a broad understanding of the research agenda of macroeconomics, I don’t have a very good picture of how it is divided into various schools and traditions. Is there a way to briefly summarise what exactly New Keynesian macro is and how it relates

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