Abu Yahya's definitions
(ECONOMICS) situation in which demand confidence in banks or borrowers is so low that monetary policy (i.e., lowering interest rates) has no positive impact on the economy. A characteristic of an economic depression.
When the economy contracts, or is in a recession, it is occasionally sufficient for the authorities to lower the discount rate or the federal funds rate. This lowers the cost of borrowing money, so more people do so, more stuff is bought, and the economy recovers. But in a depression, people will hoard cash (if they have any); if the interest rate is lowered, they still won't borrow, and the banks won't lend (because they want to restore their balance sheets).
When this happens, only fiscal policy has any chance of restoring economic growth.
When the economy contracts, or is in a recession, it is occasionally sufficient for the authorities to lower the discount rate or the federal funds rate. This lowers the cost of borrowing money, so more people do so, more stuff is bought, and the economy recovers. But in a depression, people will hoard cash (if they have any); if the interest rate is lowered, they still won't borrow, and the banks won't lend (because they want to restore their balance sheets).
When this happens, only fiscal policy has any chance of restoring economic growth.
In the fall of 2008, the failure of so many major banks caused a global liquidity trap. For two quarters, the world economy suffered a very severe contraction, and millions of people lost their jobs.
by Abu Yahya April 18, 2010
Get the liquidity trapmug. (ECONOMICS) Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force. Put another way, U-6 = U-3 (headline unemployment) + discouraged workers + part-time workers in need of full-time jobs.
The US Bureau of Labor Statistics regularly publishes six estimates of unemployment. The others are U-1, U-2, U-3, U-4, and U-5. Eurostat publishes one monthly estimate of unemployment for the European Union, which is approximately midway between U-3 and U-4.
The unemployment statistics for the USA are collected through a monthly Current Population Survey (CPS) (also known as the household survey) and an establishment survey.
The US Bureau of Labor Statistics regularly publishes six estimates of unemployment. The others are U-1, U-2, U-3, U-4, and U-5. Eurostat publishes one monthly estimate of unemployment for the European Union, which is approximately midway between U-3 and U-4.
The unemployment statistics for the USA are collected through a monthly Current Population Survey (CPS) (also known as the household survey) and an establishment survey.
U-6 is often referred to as "real unemployment" because it attempts to measure the total number of people who would like to have more work than they do have. Some have argued that U-6 is closer to historic measures of unemployment than U-3 is (we didn't have either during the Great Depression).
by Abu Yahya July 15, 2010
Get the U-6mug. a current account deficit; a negative net flow of liquid assets to the citizens of a particular country. The external balance includes the trade balance, net foreign factor income, and net foreign aid *received*. Usually the main cause of an external deficit is a trade deficit.
by Abu Yahya February 14, 2009
Get the external deficitmug. Money that (a) derives its value entirely from the mandate of the government, and (b) cannot be freely traded. Fiat money is not the same thing as floating currency, because if a floating currency is intrinsically worthless then its lack of worth will be reflected in the forex markets. Fiat money, on the other hand, does not require a disciplined monetary of fiscal policy on the part of the issuing authorities; exchange rates are fixed by decree, which means the state also controls supplies of hard (foreign) currency.
by abu yahya September 28, 2008
Get the fiat moneymug. Economic problem faced by LDCs. The problem occurs when the country tries to stimulate FDI by establishing a hard peg of its currency to that of another country (usually the US dollar). Initially, the plan may work very well, but then, as capital flows in, growth prospects deteriorate rapidly because the local currency is so strong its exports are not competitive. The country's growth slows down, and external debt soars. The government is stuck trying to defend the currency on international markets, a battle it is nearly always doomed to loose.
Term was coined by De la Torre, Levy Yeyati, and Schmukler in "Living and Dying with Hard Pegs: The Rise and Fall of Argentina’s Currency Board," *Economia*, Spring, pp. 43-107
Term was coined by De la Torre, Levy Yeyati, and Schmukler in "Living and Dying with Hard Pegs: The Rise and Fall of Argentina’s Currency Board," *Economia*, Spring, pp. 43-107
Right from the beginning of the De la Rúa administration (which assumed power in December 1999), the Argentine economy was caught in a CGD trap. The currency was overvalued, growth was faltering, and the debt was hard to service.
by abu yahya June 24, 2008
Get the CGD trapmug. (FINANCE) a person or entity that lends money to someone else by creating securities and selling them. In commercial milieux, this is investment banking, and the most famous investment bank is Goldman Sachs. Another major investment bank is Morgan Stanley.
Most major countries have a ministry of the treasury, or ministry of finance, that issues bonds for the government and is responsible for selling them to raise money for government borrowing. These are treasury securities.
Most major countries have a ministry of the treasury, or ministry of finance, that issues bonds for the government and is responsible for selling them to raise money for government borrowing. These are treasury securities.
by Abu Yahya May 5, 2010
Get the Underwritermug. (MATHEMATICS) a number consisting of a real number and an imaginary number; imaginary numbers are multiples of the square root of -1.
by Abu Yahya April 23, 2010
Get the complex numbermug.