I used excel to construct a visualization of the Cobb-Douglas production function (explicitly presented in the graph titles). The production function expresses the output of any given firm as a function of two inputs (labor and capital) and parameters (alpha and beta). When the sum of alpha and beta equals 1, it can be shown … Continue reading Cobb-Douglas Visualisation – I
The necessary and sufficient condition for convergence is that the slope of the supply curve be greater than the absolute value of the slope of the demand curve. If the slope of the supple curve is less, then price and quantity diverge from equilibrium over time.
Deregulation Going into the 1980s, American banks faced heavy M&A, intrastate branching, and interstate banking restrictions. By the end of the 1980s, most states had lifted these M&A and branching restrictions… Consolidation Consequently, the number of mergers increased while the number of new entrants into the market declined. The cost of entering the market was … Continue reading Deregulation, Consolidation, and Collusion in American Banking
A brief analysis of macroeconomic data reveals that there is growing income inequality in the United States. Income inequality has many undesirable outcomes such as political division, unemployment, and large public and private debt (the former is now more than 100% of GDP and the latter is just over 200%). The progressive tax in the … Continue reading The Cost of Equality
Partially out of boredom and partially because I was inspired by the movie title “Life of Pi”, I decided to make a monte carlo simulator that could approximate the value of pi. Monte carlo simulations are used in everything from derivative pricing to biology (and, in this case, boredom alleviation). Basically, it’s good for solving … Continue reading Monte Carlo Simulation of Pi
I purchased this book on a whim a few weeks ago. My high hopes were satisfied as Shiller gave insightful explanations of how the subprime bubble occurred and offered innovative short-run and long-run suggestions for minimized the risk of another crisis. Here are a few of his propositions: Democratize finance. A major cause of the … Continue reading “The Subprime Solution”: a must-read