*noun*, efforts by the government to intentionally run a deficit in order to stimulate the economy during a recession. Loosely associated with Keynesian economics.
According to basic economic theory, recessions occur because there is a basic mismatch between aggregate demand and potential output. One approach for solving this is for the government to buy more goods and services than it has revenues to cover, thereby creating conditions in which effective demand is greater than the stock of goods currently in business inventory (given recessionary prices).
Under a stimulus, the jolt of extra money in circulation creates inflation, which has the effect of lowering real prices. Customers then respond to the {de facto} price reduction by buying more, which leads to more hiring, thence to more effective demand, thence to economic recovery.
Another reason fiscal policy stimulates the economy is that the private sector is not investing or consuming its own output. Increased taxes would simply reduce private consumption, so those cannot be increased; but spending is increased to fill the breach.
According to basic economic theory, recessions occur because there is a basic mismatch between aggregate demand and potential output. One approach for solving this is for the government to buy more goods and services than it has revenues to cover, thereby creating conditions in which effective demand is greater than the stock of goods currently in business inventory (given recessionary prices).
Under a stimulus, the jolt of extra money in circulation creates inflation, which has the effect of lowering real prices. Customers then respond to the {de facto} price reduction by buying more, which leads to more hiring, thence to more effective demand, thence to economic recovery.
Another reason fiscal policy stimulates the economy is that the private sector is not investing or consuming its own output. Increased taxes would simply reduce private consumption, so those cannot be increased; but spending is increased to fill the breach.
I think it is possible that fiscal policy will have even more 'oomph' in this situation," Christina Romer, who heads the Council of Economic Advisers, told an economics conference.
"When households and businesses are liquidity-constrained by reduced lending, any money put in their pockets is more likely to be spent," she said.
--Reuters, "White House's Romer: Stimulus may pack more punch" (3 March 2009)
"When households and businesses are liquidity-constrained by reduced lending, any money put in their pockets is more likely to be spent," she said.
--Reuters, "White House's Romer: Stimulus may pack more punch" (3 March 2009)
by Abu Yahya March 03, 2009
Get the fiscal policy mug.(ECONOMICS) Persons unemployed 15 weeks or longer, as a percent of the civilian labor force.
The US Bureau of Labor Statistics regularly publishes six estimates of unemployment. The others are U-2, U-3, U-4, U-5, and U-6. 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-2, U-3, U-4, U-5, and U-6. 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.
Analysts use U-1 as a measure of the proportion of people that can no longer replace employment earnings with unemployment insurance or savings.
by Abu Yahya July 17, 2010
Get the U-1 mug.(BUSINESS & MEDIA) 3rd largest media holding company in the world; US holdings include Fox News, Wall Street Journal, New York Post, and Dow Jones; in the UK, News of the World, *The Sun*, *The Sunday Times*, & The Times (London); and a couple dozen papers in Australia, plus Sky Broadcasting. News Corp also owns HarperCollins & 20th Century Fox.
News Corp is fairly aggressive for a holding company in actually imposing a unified strategy and brand identity on its holdings. It was created by Rupert Murdoch from News, LTD. (a firm created by Murdoch's father, Sir Keith) in 1979, a few years after he went on a media buying spree in the USA. Murdoch became a US citizen so he could legally own US TV stations. The Murdoch family owns 29% of News Corp; Saudi Prince Al-Walid bin Talal owns 7%.
News Corp launched Fox News in 1996 to compete with CNN; shortly before this, News Corp also launched the neoconservative magazine *The Weekly Standard* with William Kristol as its editor.
News Corp is fairly aggressive for a holding company in actually imposing a unified strategy and brand identity on its holdings. It was created by Rupert Murdoch from News, LTD. (a firm created by Murdoch's father, Sir Keith) in 1979, a few years after he went on a media buying spree in the USA. Murdoch became a US citizen so he could legally own US TV stations. The Murdoch family owns 29% of News Corp; Saudi Prince Al-Walid bin Talal owns 7%.
News Corp launched Fox News in 1996 to compete with CNN; shortly before this, News Corp also launched the neoconservative magazine *The Weekly Standard* with William Kristol as its editor.
News Corp is not as large as Walt Disney or Time Warner, but it has been far more successful as a business model than its larger competitors. That's mainly because Murdoch focused on finances and political strategy, whereas the other media conglomerates remain unwieldy, random agglomerations. It's like a battle between a remorseless bulldozer and a large heap of sand.
by Abu Yahya September 01, 2010
Get the News Corp mug.(FINANCE) a call option that is written by a party who possesses none of the underlying stock; a commitment to sell a fixed amount of something at a fixed price, of something one does not happen to have.
Writing an option means selling a certificate that guarantees the holder can buy a traded item for a guaranteed price (strike price). The person who writes the option is betting that the price of the underlying stock will go down (shorting a stock, AKA a short position). If the person writing the option is correct, then she makes money off the sale of the option, but does not have to worry about honoring the option, since it is out of the money and has no intrinsic value.
If the person writing the option is wrong, and the price of the underlying stock goes up, then she must buy the item at the higher spot price specifically to sell it at the low strike price ("short cover"). In rare cases, a person who makes this sort of error will actually drive the spot price much higher than it would have gone ordinarily.
Writing an option means selling a certificate that guarantees the holder can buy a traded item for a guaranteed price (strike price). The person who writes the option is betting that the price of the underlying stock will go down (shorting a stock, AKA a short position). If the person writing the option is correct, then she makes money off the sale of the option, but does not have to worry about honoring the option, since it is out of the money and has no intrinsic value.
If the person writing the option is wrong, and the price of the underlying stock goes up, then she must buy the item at the higher spot price specifically to sell it at the low strike price ("short cover"). In rare cases, a person who makes this sort of error will actually drive the spot price much higher than it would have gone ordinarily.
Naked option writing is quite risky because you can make only a limited amount of money. yet the risks are high.
by Abu Yahya April 15, 2010
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While Japan had a trade surplus and the USA had a trade deficit, both had something called a trade balance, which was negative for the USA and positive for Japan.
While Japan had a trade surplus and the USA had a trade deficit, both had something called a trade balance, which was negative for the USA and positive for Japan.
During economic downturns, political leaders become very concerned if their country is running a trade deficit, because it means that jobs are being lost to business overseas.
by Abu Yahya February 14, 2009
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In order to find out what sorts of thing his son Laertes was up to, Polonius had his personal spy strike up conservations with classmates and bring up made-up rumors about him. Polonius thought it was all right to suggest his own son was dueling, gambling, or whoring ("drabbing"). but thought anything worse might "dishonor" poor Laertes.
by Abu Yahya March 21, 2010
Get the drabbing mug.A problem faced by a person with specialized expertise in any area, in which the implications of the opinion are unpopular and likely to be rejected by those who need that expertise. For example, economists may be likely to know that, in some cases, a "market solution" is inherently impossible, but proposing an alternative is an exercise not merely in futility, but career suicide among those who employ economists. It arises because the expert knows more about the field than her employers.
The statistician was asked by his boss to make a case for risk homeostasis, but knowing better, he faced an expert's dilemma: telling the truth would get him tarred as a 'socialist.'
by abu yahya June 23, 2008
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