February 24, 2003
February 20, 2003
Two-Period Diagrams
A collection of intertemporal substitution and production possibility frontier diagrams.
Continue reading "Two-Period Diagrams"February 19, 2003
Economist Declares Victory
UNC Ph.D. Ken Hightower declares victory over New Jersey snowfall:
Click on the thumbnail to see a larger picture.
February 18, 2003
Bond Yields
The bond yield is the interest rate that makes the present value of the principle and coupons equal to the observed price.
Income and Substitution Effects
Continue reading "Income and Substitution Effects"Backward Bending Labor Supply Curve
Our discussion of income and substitution effects stirred a memory of the labor-leisure diagram that show how labor supply is related to the wage rate.
Continue reading "Backward Bending Labor Supply Curve"February 13, 2003
Tax-Free Savings Plans
Making interest income tax-free would cause people to work harder when they are middle-aged and less when they are old.
Continue reading "Tax-Free Savings Plans"Should you go to college?
We revisited this issue using a production possibility frontier. This provides a smooth version of our previous discrete choice between college and no college.
Continue reading "Should you go to college?"February 11, 2003
Saving for Retirement
We analyzed three basic plans:
February 06, 2003
Should you go to college?
We used going to college as a model for the kinds of investment decisions facing firms. It takes four years to start seeing a return from the investment just as it takes a while to build a factory. The costs are paid up front.
We can think about the investment decision in two ways.
The calculations for bond yields are complicated enough to pursuade us to use the present value approach for our numerical examples.
February 05, 2003
February 04, 2003
Stock Prices
While we have already discussed the most fundamental explanation for stock prices ("It is all a matter of supply and demand," reference),
we can also use present value calculations to think about the basis for that demand.
We derived two equations:
