Questions tagged [mathematical-economics]

For questions related to application of mathematics methods to represent theories and analyze problems in economics.

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Right-to-manage wage bargaining (simple algebraic steps)

I am following (and trying to understand) a paper where the wage of unskilled workers is determined as the outcome of wage bargaining between a single union and a single firm in a right-to-manage ...
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Return of Effort - Influencing ROI with an integer

I am trying to build a formula that will give me what I'm calling the "Return of Effort" (ROE). This will be used to compare projects and decide which ones were worth the money when ...
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Why is the variance formula different to the portfolio variance formula?

I'm trying to wrap my head around the variance, covariance and correlation. I'm clear on the formulas in their basic forms. However, confused as to why the portfolio variance formula is:$$Std^2=(W_a^2)...
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Can someone help me solve this? Finding revenue function given two different prices and quantities

Have a Math for Econ intro course exam coming up and this question showed up in one of my past papers, I am afraid I do not know exactly what to do. Can anyone help me solve it? The following is the ...
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Log-linearization of Euler consumption Equation

I've been using a resource from Sims (2011) to log-linearize everything. However I'm struggling with the following equation: $$C_{t}^{-\gamma}=\beta E_{t}[(\alpha \frac{Y_{t+1}}{K_{t+1}}+1-\delta) C_{...
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Solow residual with cost minimization, calculus

I am trying to get a good understanding of the steps involved in solving the dual of a maximization problem, namely cost minimization. At some point (last two steps), the author ends up with the ...
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Total derivation with respect to time.

Good evening everyone, I am trying to get a good understanding of total differentiation versus time. The problem I can't understand is the following. Starting with the basic national income accounting ...
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How to optimize this function

I want to maximize the following function: $u_{t}=(1-\gamma)\ln(c_{t})+\gamma \ln(n_{t}h_{t+1})$ subject to $z_{t}n_{t}(\tau+e_{t+1})+c_{t} \leq z_{t}$, $c_{t} \geq \tilde{c}$, $n_{t} \geq 0$, and $e_{...
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What is the formula of an APY with an initial borrow fee?

I am working on a platform where lenders can lend an amount of money and there are borrowers who can borrow from that pool. All borrow amounts are subject to a yearly interest rate (4%) compounded on ...
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How to solve discrete time first order difference equations when b is a function of t?

I am having some trouble solving this particular equation: $y_{t+1}-2y_t=2^t$ Which brought me to realize that I don't even understand how to solve the general case of a difference equation $y_{t+1}-...
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Why Mr.Brown Still get the interest?

here is the example in broverman's book A promissory note is a short-term contract (generally less than one year) which requires the issuer of the note (the borrower) to pay the holder of the note (...
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Ranking estimators according to mean absolute deviation, with estimated ground truth

Looking for simple proof (or counterexample) for the following claim. Setup: Let $\{\hat{\theta}_A, \hat{\theta}_B, \hat{\theta}\}$ be random variables such that $\text{Cov}(\hat{\theta}_A, \hat{\...
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Compound interest formula is not understandable

I am struggling to understand the formula for compound interest. More specifically what the $n$ stands for. The formula is as follows according to the wikipedia: $$ A = P(1 + \frac{r}{n})^{nt} $$ ...
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Creating a MATLAB program using Euler Explicit Method [closed]

I want to solve following ODE using Euler explicit method. $$S'(t)=\frac{b}{m}\bigg(u(t)+\frac{P(t)}{p}\bigg)$$ where $S(0)=\frac{q}{m}$. We can have any value for the parameters. $P(t)$ should be a ...
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Econometrics/Statistics Regression Question [closed]

As you can see from the provided picture given Heart attack given rate per 100,000 population. I was able to successfully ran my regression; but now I am trying to figure out how to alter my ...
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Lagrange Multiplierd for Economics

An individual purchases quantities a, b, and, c of three different commodities whose prices are p, q, and r, respectively. The consumer spends m dollars, where $m\gt2p$, and the utility function of ...
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Demand function in Edgeworth box economy

Show in Edgeworth box economy, where $\omega_1=(3,3), u_1(x_1,x_2)=x_1+2x_2,\omega_2=(4,1), > u_2(x_1,x_2)=x_1+x_2$ that the following functions determine demand function of agents ($\lambda\in[0,...
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Proof of Attenuation Bias

I am currently reading Introductory Econometrics by Wooldridge. Specifically, Chapter 9, in which he shows the attenuation bias that occurs due to the classical errors-in-variables assumption. For the ...
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A question about "welfare independence"

I am working on some applications of measures of inequality (economic inequality). Upon reading a paper by Kolm (Kolm, S. C., Unequal Inequalities I, Journal of Economic Theory, 12 pp 416-442, 1976) I ...
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Calculate daily Sales budget from a monthly number based on daily sales Percentage.

Background I am working on a problem for a rudimentary business intelligence initiative. I'm in IT by trade, so this level of mathematics is a bit of a stretch for me. Problem Finance projects sales ...
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