Category Archives: Macroeconomics

How to compute the Lorenz Curve

In contrast to our previous post, that is the post that summarized the Lorenz Curve in general terms, this post details how to construct the Lorenz Curve and provides a hypothetical example in R. Advertisements

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The Lorenz Curve

The Lorenz Curve displays the actual income or wealth distribution of an economy. The concept was brought up by the American economist Max O. Lorenz in 1905. The curve represents a graphical representation of the income or wealth distribution of … Continue reading

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Tobin’s q-Investment Theory

In the 60s and 70s, economists including Nicholas Kaldor and James Tobin came up with an alternative investment theory: the q-investment theory, sometimes also referred to as Tobin’s q-investment theory. At its core, Tobin’s q theory of investment relates fluctuations … Continue reading

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The Neoclassical Theory of Investment

Dale W. Jorgenson contributed to the development and understanding on the neoclassical investment theory. In the following post I will try to outline and discuss the neoclassical investment theory in simply words. At its heart, Jorgenson’s investment model bases on … Continue reading

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General Principles for Specifying a Dynamic General Equilibrium Model

The Dynamic General Equilibrium Model (DGE) is characterized by various features. Firstly, a DGE is dynamic, which means that it considers an economy over time. Second, it considers a general economy, which implies that the modelled economy is fully specified. … Continue reading

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Capital Adjustment Costs

Understanding investment activity in an economy is not trivial. The erratic nature of firm level investment activity is somewhat of a mystery to me and it took me quite some time to get a vague idea of what could be … Continue reading

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Balance Statistic

The following article tries to explain the Balance Statistic sometimes referred to as Saldo or Saldo Statistic. It is used as a quantification method for qualitative survey question. The benefit of applying the Balance Statistic arises when the survey is … Continue reading

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