| action lag | Period between the time a policy is decided on and the time it is implemented.
|
 |
|
|
| activist policies | Policies that respond to the current state of the economy and try to stabilize output.
|
|
|
|
| activist rules | Rules that have countercyclical features.
|
|
|
|
| automatic stabilizer | Policy that reduces the impact of an economic shock without
requiring case-by-case intervention. Proportional income taxes and unemployment insurance are examples.
|
|
|
|
| certainty-equivalence policy | A policy made under the assumption that there is no uncertainty regarding future events.
|
|
|
|
| credibility | The degree to which the public believes that the government will implement its announced policies.
|
|
|
|
| decision lag | Period of time required to decide on the proper response to a macroeconomic–shock.
|
|
|
|
| discrete lag | Time that passes before an effect is felt. Contrast distributed lag.
|
|
|
|
| distributed lag | Time that passes while an effect gradually accumulates. Contrast discrete lag.
|
|
|
|
| dynamic inconsistency | Tendency of optimal policy to be different at different points
in time.
|
|
|
|
| dynamic programming | A way of solving a problem by working backward through time; choices made at one point in time anticipate choices that will need to be made later.
|
|
|
|
| econometric model | Model used to make quantitative economic predictions.
|
|
|
|
| fine tuning | Continuous attempts to stabilize the economy in the face of small disturbances.
|
|
|
|
| indicators | Economic variables that signal us as to whether we are getting close to our desired targets.
|
|
|
|
| inflation targeting | Using monetary and fiscal policy to achieve a particular inflation rate.
|
|
|
|
| inside lag | Period between the time a disturbance occurs and the time action is taken.
|
|
|
|
| instruments | The tools policymakers manipulate directly to affect the economy.
|
|
|
|
| loss function | A rule used to evaluate the success of a policy. It measures the damage done when the policy misses its target.
|
|
|
|
| marginal loss function | Measures the change in the loss function from a small change in the policy instrument.
|
|
|
|
| multiplier uncertainty | Uncertainty about effects of policy changes due to uncertainty about value of fiscal policy multiplier, monetary policy multiplier, and so on.
|
|
|
|
| outside lag | Time required for a policy change to take effect.
|
|
|
|
| portfolio of policy instruments(diversification) | The range of policy instruments available to the policymaker.
|
|
|
|
| real GDP targeting | Using monetary and fiscal policy to achieve a particular rate of real GDP growth.
|
|
|
|
| recognition lag | Period between the time a disturbance occurs and the time policy-makers discover the disturbance.
|
|
|
|
| rules versus discretion | The issue of whether or not monetary and fiscal authorities
should conduct policy in accordance with preannounced rules.
|
|
|
|
| targets | Identified goals of policy.
|