National Bureau of Economic Research Management

Question: Discuss about the National Bureau of Economic Research Management. Answer: Introduction: As per the concept of economics, the model can be described as the hypothetical structure and also in terms of variables as well as the logical connectivity between themselves. As opined by Coglianese et al. (2016), the concept of modern economics can be described as the concept of intricate machine. The major role is dealing with the inadequate resources and the distribution of the output within the different agents such as governments, the individuals and the other organizations. The measurable signals would reflect that there are the regulations, which can drive the difficulty while allocating the products. In addition, the trend of the annual productivity of the developed nations would be predicted that it would be upward. The economic models have a direct explanation of reality and it would be intended to identify the economic hypothesis for the performance. However, all of the economic models are predicted to be subjective and it would estimate the reality. It can highlight the predicted occurrence. The government of a country needs to avoid the predictions and it seeks to describe the validity of the economic theories. In this connection, Koh, Lee and Choi (2013) opined that no economic models would highlight the explanation of the reality. The major reason is the inadequate attention to develop a linkage among the entire demand, wealth and the higher risks. As per the theoritical reports, it can be observed that there are some definite considerable research within the exposure. This research would highlight the behavioral equations to represent the economic models. The economic models are necessary to implement the existing equations in order to develop an association with the new equations as well as with the financial sector. Economists would make the necessity of the factors, which can examine the models with the help of statistics and the predicted hypothesis. According to Lao, Ellis and Christofides (2014), the market actors would not treat rationally, but also they used to treat based on the identical mental models and the economists would develop it. Therefore, the economist Keynes described the concept and mentioned that economics is a section of moral science. As per the concept of Levin, Lewis and Wolak (2016), it can be stated that the price elasticity of demand is an estimation, which can reflect the association among the quantity demand of the products with the change of the cost of the products. Therefore, price elasticity of demand can be represented as (percentage change in demand / percentage change in the price level). Rabin (2013) cited that in case of normal goods, the demand for the goods will be raised if the level of income rises. Nonetheless, if the price level of the product would raise, then the demand for those products would be declined. The above figure would explain that the demand for the foods would rise if the level of income of the consumers would increase. On the other hand, the demand for the products would decrease if the income level would decline. Price elasticity of the luxury goods As per the concept of economics, luxury products are the products for which the requirement for the products would rise more than the increment of the level of income of the consumers. In addition, Thimmapuram and Kim (2013) cited that if the price of the goods would raise then the quantity demand of the luxury goods for the products would be declined. However, if the level of income of the consumers would increase, the requirements for the luxury products would increase with the rise in the level of the price of the goods. It is noted that the price elasticity of the luxury goods would be highly elastic. The examples of luxury goods are cars, jewellery, air conditions etc. From the above figure, it can be observed that if the level of price of the luxury goods would augment from P1 to P2, then the change in the percentage of quantity demand would increase from D1 to D2 with the augmented in the price level. Hence, it can be inferred that the change of the price level is less than the change of the demand for the luxury products. As a result, it can be described that due to the price level change, the transformation of the quantity demand would be increased more as the income level would increase. In this connection, Varian (2016) opined that the price elasticity of demand for the luxury goods would be inelastic only for the higher income group of people and it would be elastic for the poor income group of people. Price elasticity of the giffen goods It is known that giffen goods are those goods, which would be consumed more if the price of the products would rise and the income level of the customers would be decreased. Some of the examples of giffen goods are salt and sugar. The demand for the products is perfectly inelastic. Therefore, it can be mentioned that if the price of the products would fluctuate, then the percentage change for the quantity demand would remain same. The above diagram depicted that the demand curve for the giffen goods is completely inelastic. If the income level would decline and if the price level would be augmented, then it can be inferred that the percentage of quantity demand would decline. Moreover, it can be observed that if the level of price would rise from P1 to P2, then the demand for the products would not change. Therefore, the price elasticity would rise. Furthermore, Rabin (2013) cited that the income effect would control the substitution effect of the goods. References Coglianese, J., Davis, L. W., Kilian, L., Stock, J. H. (2016). Anticipation, tax avoidance, and the price elasticity of gasoline demand.Journal of Applied Econometrics. Koh, Y., Lee, S., Choi, C. (2013). The income elasticity of demand and firm performance of US restaurant companies by restaurant type during recessions.Tourism Economics,19(4), 855-881. Lao, L., Ellis, M., Christofides, P. D. (2014). Smart manufacturing: Handling preventive actuator maintenance and economics using model predictive control.AIChE Journal,60(6), 2179-2196. Levin, L., Lewis, M. S., Wolak, F. A. (2016).High frequency evidence on the demand for gasoline(No. w22345). National Bureau of Economic Research. Rabin, M. (2013). An approach to incorporating psychology into economics.The American Economic Review,103(3), 617-622. Thimmapuram, P. R., Kim, J. (2013). Consumers' price elasticity of demand modeling with economic effects on electricity markets using an agent-based model.IEEE Transactions on Smart Grid,4(1), 390-397. Varian, H. R. (2016). How to build an economic model in your spare time.The American Economist,61(1), 81-90.