Reddit Economics Network

Is there any research that calculates their net fiscal transfers? It’d be interesting if it also accounts for their birthright children, but it’s not necessary, and also any intl evidence.

Apologies for the wall of title. As a layman, I hope the question is well worded. Although I'm not looking directly for normative judgments, educated personal opinions are welcome :)

Markets have been boom alongside the adoption and access to financial markets.

The gain in popularity also coincides with covid savings as well.

Has anyone measured how much money app based investing (Robinhood, Wealthsimple, ect.) have added to the market?

So I was wondering about international direct cash transfers like Give Directly. Should the effects be basically equivalent to money printing in the repicient state? Of course, globally, the money supply hasn't expanded since it's a transfer. But for the local economy that receives the money, isn't it just an expansion of the money supply that is equivalent to what you would get if you print the same amount of money and give it to the same people? Of course, I don't believe that money printing is always bad. The thought is more like, if international cash transfer is effective (as it probably is, given the evidence), why don't the local governments just print the money instead?

I was talking to a person who said all taxation is immoral and should be abolished entirely. What would we as americans lose if we had 0 taxes and how would it affect society?

Could you provide me best websites or blogs or apps that provide & share economics news for beginners without knowledge

It is now commonly accepted that central banks should be independent, partly to avoid jeopardizing monetary stability in pursuit of political objectives and to enhance the credibility of the currency.

Don’t you think the same principle should apply to fiscal policy management? By entrusting the budget to an independent entity (such as the Fed or another separate organization), it could focus on long-term growth, fiscal stability, and reducing unemployment without being influenced by political pressures or succumbing to populism. Parliament could retain a supervisory role, for instance, by preventing excessively high taxes or setting economic goals to be followed.

From a strictly economic perspective, what do you think of this idea? If you disagree, why do you believe that fiscal policy management by the state is preferable to a model similar to that of central banks?

I'm familiar with the idea that the military-industrial complex is responsible for propagating (or at least lobbying for) war, which I've usually seen dismissed as oversimplified or conspiratorial. However, based on my very basic understanding of corporate law/norms, it seems like these companies might have a legal or even ethical imperative to promote war (i.e. it would be more far-fetched to suggest that that arms manufacturers don't actively seek to lobby/influence politics towards war using whatever means are available to them). I'm basing this on three basic assumptions:

1. A company's sole responsibility is to maximize its profits, and the directors of a publicly-traded company have a fiduciary duty to prioritize increasing returns for its shareholders over other concerns (i.e. even if war is socially undesirable in a general sense, the direct benefit of a war should be the foremost concern for an arms manufacturer).
2. On balance, war is likely to be positive for an weapons manufacturing firm in terms of profits and stock value, whereas peace is likely to be negative.
3. Therefore, firms/directors have a general responsibility, if not a legal duty, to promote war and discourage peace using whatever means of political influence are available to them (e.g. lobbying, PAC campaign contributions, etc.)

I'm assuming the above is oversimplified or mistaken to some extent since I haven't seen this widely discussed as a social problem aside from its role in conspiracy theories, but I'm not sure what I'm missing. Is this a problem that is discussed (even if on a different/more sophisticated level) in econ literature? If so, how do economists/corporate legal theorists think about this issue?

I'm reading about how Trump is threatening the BRICS nations with a 100% tariff if they were to dedollarize in the future. I've always had questions about the USD. Here they are:

• How is trading in USDs beneficial to the Americans? This would have the effect of making the USD a strong currency and, hence, every other currency is weaker compared to it. Therefore, their products are made cheaper compared to American goods/products. The Americans complain when other nations are weakening their currency or make their currency artificially cheaper, like the Chinese and how they buy trillions of our debt to keep their currency artificially lower. However, when the USA demands everyone to use the dollar, this also keep other currencies weaker and the USD stronger.
• Is the USA getting all their imported goods/services from overseas cheaper by dint of the foreigners using the USD?
• Why didn't foreigners not come up with the idea of dedollarization much earlier?
• When the EU came up with the euro, did the USA feel threatened by this?
• Why is Trump angered when the BRICS nation do trade amongst each other in a currency other than the USD? That makes no sense that when Indians want to buy Chinese solar cells, that they're forced to use USDs.
• What would the USA lose if they had to buy Rupees to do business with the Indians?
• Under what circumstances could Indians prefer to do business with the Americans in rupees and not USDs?

What is the optimal level of consumption for the USA economy and China's economy, and why isn't a lower level not a good thing?

I'm finding out that that the USA's GDP is about 71% based on consumption, but in China, it's more like 39% of GDP. However, we can see that their consumption was at 53% of GDP in 1981, but the economy then was far smaller and under-developed.

The USA, OTOH, has a GDP that's 71% from consumption, which is a level that's even more than what it was in China in 1981. However, the USA isn't poor like 1981 China.

I'm finding out that the UK's GDP is about 63% of their GDP, and Germany's is about 51%.

• All 3 of these Western nations are fully industrialized, and the standard of living is very high. Yet, the amount of consumption that they have is quite different. Does this difference in consumption explain why one of these nations maybe more robust in dealing with economic shock?

• Are countries with low consumption indicative of a populace who don't buy much? If so, how is this a bad thing, since it also implies that they're less wasteful of a nation whose GDP is very reliant on consumption?

• Why do Western nations want China to increase their consumption? In 1981, their GDP was 53% of consumption, and it was a much poorer nation then.

• Is there an inverse coorelation between government consumption and household spending, since a government like Germany has universal healthcare. So there is no personal consumption when a person in Germany receives healthcare, but in the USA, maybe when they take care of themselves in a health crisis, that this constitutes personal consumption.

Thanks for your consideration.

If times are good enough that someone gets greedy, and suddenly everyone's hurting (Like with Covid), then doesn't it follow that the true line for bankruptcy wouldn't line up with reality, and that someone would notice unless you adjusted?

Do people actually think about this and plan for it? Or do not and get caught?

Hi. I want to become a macro analyst, focusing on FX and rates. I had 1 year of experience as a FX & rates analyst in an investment bank. I worked directly under the economists and FX strategists. However, it is a contract job and my contract was not extended.

My educational background is somewhat unconventional, as I do not hold an UG degree in economics. So I want to pursue a master's in Economics to enrich myself and get back to my former jobs

While researching on LinkedIn, many FX & Rates analysts do start from economics degree. ​However, I asked people from the industry (my former boss) and they said traditional academic economics degrees aren't really that practical to help them write reports / initiate trading ideas. ​ After all, Economics covers a lot of thing, and many tend to be theoretical and not directly applicable to the job.

I am currently comparing the curriculum of various master's programs. 

(i) Which subjects do you consider essential for securing a position in the FX/rates sector? 

(ii) Additionally, do you have recommendations for specific master's degrees?

(I have heard that the MIEF program from Johns Hopkins Uni SAIS is very practical in this area, but probably too expensive for me)

Aside from Germany in the inter-war period and possibly Zimbabwe, what are some historical examples of the Wage-Price Spiral?

https://i.postimg.cc/7LtzVdTt/Screenshot-2024-11-30-131503.png

It is Cross Elasticity of Price between Education Spending and increases in the price of food, selected nations

I am a US citizen but work in Canada. Should I convert all my CAD to USD ahead of Trump tariffs and what not?

Why do all countries use the US dollar for world trade? This reliance causes a lot of trouble, like the need to follow US sanctions. Wouldn't it make more sense to use commodities like gold, whose value generally increases long-term and has less volatility?

Many international banks and financial institutions comply with US sanctions to avoid penalties, even if the transactions don't directly involve the US dollar. However, with cryptocurrency, there is no bank involved, thereby limiting that issue. There are cryptocurrencies that cannot be mined, and there are ways to limit their volatility, such as using stablecoins.

What are the main reasons countries stick with the US dollar instead of switching to gold or cryptocurrencies for transactions?

I'm in my mid 30s, have both a Bachlors and a Masters in Economics, currently working for a government department in Sydney, Australia, doing regulatory and competition economics.

I feel like I've pigeonholed myself into a niche area. My job is very comfortable with decent pay and a generous work-from-home policy, but I'm getting bored of it, so I'm now exploring other paths. I have some free time to do further studies as well.

I'm fairly introverted and generally prefer to do technical/analytical work (which is a large part of my current job as well, although it's become very repetitive).

So I'm wondering what are some other jobs out there that might suit me (preferably non-government and non-managerial jobs)? I'm not looking for the silver bullet, just ideas that I can look more into. I'm open to non-economist jobs where economics skills might be useful, e.g. data science.

I'm also open to ideas for side-hustles, e.g. I've found my economics/quantitative skills to be very useful in managing my own finances, investing in ETFs, churning credit cards, etc.

Thanks in advance

We're going to shamelessly steal adapt from /r/AskHistorians the idea of a weekly thread to gather and recognize the good answers posted on the sub. Good answers take time to type and the mods can be slow to approve things which means that sometimes good content doesn't get seen by as many people as it should. This thread is meant to fix that gap.

Post answers that you enjoyed, felt were particularly high quality, or just didn't get the attention they deserved. This is a weekly recurring thread posted every Sunday morning.

As a person whose grandfather lived to see 91 and a whose grandmother is still alive at 91, I feel blessed. May she hit 100. However, I decided to look at the topic of ageing and economics a bit more impartially.

It is evident that the median age for mortality in Western Europe and the US is going up. In the Netherlands, where I live currently, it is expected to be in the early 80s for males and in the mid-80s for females.

Often I wonder whether this is a curse. For one, you can't afford to retire at 60, you must keep working till 65-66 till the pension kicks in. Also, you might retire at 66, but how do you know inflation wouldn't increase so rapidly in 14 years, that the final years of your life are going to be miserable? Finally, how healthy are people who live that long. They may be alive, but if they need assistance for everything then they aren't living their life fully, just dragging through - like my grandfather in the last 5 years of his life.

If there was, hypothetically, a fixed age of mortality, say 80, wouldn't it be much better (to financially plan your life)? You know exactly how many years you've got when you are retiring, say 15, so that you don't need to "over save", and governments don't have to pay as much for old age healthcare. It feels like, the more our society develops technologically, the more unbearable life becomes.

5 months ago I asked about how interest rates affect currency appreciation:

https://www.reddit.com/r/AskEconomics/comments/1dprwok/if_the_central_bank_of_currency_x_has_interest/

However, in practice this doesn't seem to be quite the case. I have looked into the particular case of the USD and CHF, and wondered, what would have been more profitable, if to buy bonds in CHF (low interest rates) or in USD (higher interest rate). The time window of the analysis is ~10 years.

1. Starting value of the conversion rate is fundamental for the comparison. Beginning of 2023 was more or less stable. This means that from ~01/01/2013, CHF/USD grew by 3.67%. https://imgur.com/a/jyj0aaf
2. Then I have calculated the compound interest I would have gotten from the interest rates of CHF and USD respectively. The values of the interest rates and timestamps could be slightly off since I had to copy them manually from graphs. The code (thanks ChatGPT) is here: https://pastebin.com/xXQ9sm0J . The result: - 1 USD -> 1.19 - 1 CHF -> 0.97 (yep, long period of negative interest)

Now, applying the new conversion rate (+3.67%) if means that we would have:
- 1 USD -> 1.19 USD
- 1 CHF -> 0.97 CHF * 1.0367 -> 1.00 USD

In conclusion, if an investor had converted CHF to USD in 2013, and then relied only on interest rates, it would have obtained a return of 19% vs 0% that obtained the investor that did not change the currency.

What explains this difference? I could not analyse other currencies but I wouldn't be surprised if this is a common pattern. I suspect that interest rates are just a small part of the puzzle so I would highly appreciate any response that dive deep into what other factors influence, how they explain the behavior of the CHF/USD rate in the last 10 years and in which scenarios is likely (not certain) to be profitable to convert a currency to benefit from higher interests.

Thank you in advance!

As the question says, looking for a source where we can see the Collateral Haircut data in the US repo market. The Collateral Haircut determines the Collateral Multiplier value, which dictates the amount of liquidity present in the financial system.

Any help?

This would really balance out the wealth inequality; companies gaining hundreds of billions in assets but still “operating at a loss” . Debts due are not considered when revising taxes, individuals/companies are required to manage just like they are now. Evasion will still exist as it does so currently but should be harder. The downside is businesses and individuals will have to disclose of all assets over a certain value (10,000usd for example) to the government. What do you guys think

So I own a business and while I dont have any employees yet, I know that we make a lot in profits disproportionate to our size. I know that other businesses similar to mine that have a lot of employees make far more than I do, but the business owners obviously pocket most of that and their workers get wages. I’m 100% sure that for each worker, the owners earn faaaaar more than what they pay them for salary.

It’s even more crazy when some of these businesses are in continents like Africa or South America and trade with the US. Like say for example, I own a vanilla bean farm in Madagascar. I earn 5 million a year and I pay my workers $1000 a year. Or I own a banana plantation in South America and I pay my workers each $8000 a year while I make 10-20 million a year because I trade with the states.

So I was thinking what would happen if we let workers earn a part of the profits? They do all the backbreaking work that is vital to the company while I barely do anything in comparison. They’d be out there in the sun toiling away while I’m in an office or at lunch with a potential client at some restaurant. It just isn’t fair. So I was imagining if I was the head of a country, I’d make it so that a portion of the profits would be divided among the workers. The higher up you are, the more you earn. You need not be a business owner to take all the profits anymore.

Is this based or absolutely stupid? Because I was thinking I just solved capitalism and wealth inequality. It feels like socialism but instead of money going into the government, it goes to the people

My fiancée just ignored me when I asked her

Argentina Per capita income is 13k$, while poverty rate is 50ish % (Source - News, most data aggregates don't include Argentina)

While India has Per Capita income of 2.5k$, and poverty rate of 15ish %.

Their Gini score index is also similar enough that, inequality cannot be the reason. Even if they measure poverty in different ways, having 13k$ per capita, means the government has a lot of money to make sure people are taken care of.

If the US government lowered the corporate tax rate for businesses that either reach a certain median wage threshold or wage increase, do you think businesses would increase wages? From my understanding businesses are already not taxed on paid wages so this would be an incentive to put even more revenue towards their employees wages in order to decrease their tax burden. If it is based on median wage, not average, then in theory it would lead to increased wages throughout the company instead of just raising the pay of top executives. It also could increase tax revenue due to the increase in worker's taxable income and more people having an increase in income taxed at a higher rate than the corporate tax rate.

I feel this could be broadly supported due to the lower corporate taxes while increasing wages. Also, would have potential to increase tax revenue to either spend on social programs/common good or reduce the “deficit/debt”. In theory it would also not increase the tax burden on workers or businesses. Obviously garnering support and enacting something like this in the U.S. is not as simple as that

Would this also potentially increase human capital? In addition to increased pay, programs such as tuition assistance, child car assistance, health programs, etc. could factor into the tax breaks.

I may have a misunderstanding of corporate taxes or maybe some of what I mentioned is already in effect but I was thinking about this recently and was wondering if this could have the outcomes I have come up with. Could this be tried at the local, state, and/or federal level? Please poke holes in my thoughts or add to the potential outcomes as I would like to see what others think about this

Not really… familiar with this subject but given the current pro-tariff political climate of the US. I see that it’s generally agreed that free trade and the like is a net positive for the economy, but there may be transitory costs in eg offshoring of manufacturing again in the US. I hence ask whether globalization as a whole has increased inequality within nations, and globally. And if so, what can be done, or even if it should be done, to remedy it.

My economics summative assessment is to make a presentation about an economics concept and I want to do mine on a funny price control or funny real world economic example. Can you guys help me find some funny economics things?

Economists rarely achieve widespread fame for their work but surely there have been economists who’s research or advice made an enormous, positive impact on the world.

Though the world is obviously transitioning to a largely cashless society, I don't think cash will ever fully be extinguished-- its just too useful as a powerless, wifi-less, external store of value (even if a largely imaginary one in a fiat currency world). Going through an emergency recently where we had no power for 2 weeks made the power of cash all the clearer to me. But is it still necessary to have change? United States change hasn't fundamentally changed (pun intended) in my lifetime, and yet $1 USD in 1989 is now worth x2.5 that amount. If change had kept up, a Quater would be worth almost 75¢, a dime 25¢. Given the rarity of cash transactions and inflation, it seems to make sense to get rid of lower denominations, but larger ones might still have their use.
So my question would be, what denominations should we ideally have in the USA?

And what macro impact would it have on our economy to get rid of change entirely, if any?

Basically title. I think certain groups in the west are very concerned about it. In Japan and South Korea, it seems like a mainstream concern. But I'm not sure if it's that big a deal? There's no reason to think that the trends will continue in the long term and lead to extinction. And we can support pensioners with their own savings or via productivity gains.