Macroeconomics

Growth Accounting Decomposing observed GDP growth into contributions from labour, capital, and residual total factor productivity using index methods.

Growth Cycle vs Classical Business Cycle The difference between growth cycles (deviations around trend) and classical cycles (absolute peak-to-trough declines); implications for cycle timing.

Growth Recession A period of output growth below the economy's trend rate, typically raising unemployment without triggering negative GDP.

Hard Landing Rapid economic slowdown leading to recession; the Federal Reserve overshoots and fails to engineer a soft landing.

Headline Inflation Headline inflation measures the total change in consumer prices, including volatile food and energy. It is what households actually pay in grocery and gas stations.

Heckscher-Ohlin Model A framework explaining why countries export goods that intensively use their abundant factors of production, providing the modern foundation for trade theory.

Hedonic Pricing A statistical technique that adjusts price changes for improvements in product quality by isolating the value of individual product attributes.

Hedonic Quality Adjustment in Output Measurement Statistical technique isolating price changes from quality improvements in GDP and production indexes.

History of Inflation Targeting by Central Banks Inflation targeting began in New Zealand in 1990 and spread globally, replacing ad-hoc monetary policy with published targets and accountability frameworks.

Hot Money Flows and Exchange Rate Volatility How short-term speculative capital inflows and outflows destabilise currencies and complicate central banks' balance-of-payments management.

Household Survey vs Establishment Survey: Two Jobs Reports The household survey (CPS) counts employed persons; the establishment survey (CES) counts jobs. They diverge for structural reasons and serve different analytical purposes.

Housing Cost Weight in CPI: Why It Matters So Much Shelter costs represent 42% of the Consumer Price Index, making housing inflation the primary driver of overall CPI swings—and a flashpoint for inflation policy debates.

Housing Starts as a Leading Indicator of the Business Cycle Why residential construction often peaks and troughs months before the broader economy, making housing starts a reliable signal of recession and recovery.

How a Trade Deficit Affects GDP: The Mechanics Explained Understanding how a trade deficit reduces the net-exports component of GDP and what it does and does not signal about economic health.

How an Aging Labor Force Affects Productivity Growth Examines how aging labor force productivity growth slows through reduced innovation adoption, lower mobility, and capital-labor imbalance.

How Cost-of-Living Adjustments Are Calculated How cost-of-living adjustment is calculated from CPI data for Social Security benefits, pensions, and wage agreements.

How Countries Adjust GDP for the Informal Economy Statistical methods used by national accounts offices to estimate and adjust GDP for informal economy activity like cash wages, gig work, and self-employment.

How Currency Depreciation Affects the Trade Balance Currency depreciation boosts export competitiveness immediately but takes months to shift volumes; the J-curve explains the short-run deficit worsening.

How GDP Is Calculated: Step-by-Step How GDP is calculated step-by-step using the expenditure formula C + I + G + (X − M), with concrete numbers showing what the economy counts as output.

How Inflation Erodes Fixed Income for Retirees Inflation impact on retirees fixed income: how sustained inflation reduces purchasing power of pensions and annuities without cost-of-living adjustments.

How Long Does a Recession Last U.S. recessions typically last 9–18 months. Learn what drives recession duration and why some downturns resolve faster than others.

How Oil Prices Affect Inflation Oil prices affect inflation through fuel, transport, and production costs. Learn how crude oil flows into consumer prices.

How Recessions Affect Small Businesses Differently Than Large Firms Small businesses face tighter credit access, steeper revenue drops, and slower recovery during recessions compared to large corporations.

How the Depreciation Rate Affects the Steady State in Growth Models See how a higher depreciation rate lowers steady-state capital stock and output per worker in the Solow model, with worked numerical examples.

How the Gig Economy Is Measured in Labor Statistics Why gig and platform workers fall outside standard unemployment surveys, and how supplemental BLS measures capture independent contractors and contingent work.

How to Calculate GDP Growth Rate Learn how to calculate GDP growth rate using quarter-on-quarter and year-on-year methods with worked examples and annualized formulas.

How to Calculate the Output Gap Learn the standard formula for calculating output gap using potential GDP, actual GDP, and worked examples.

How to Read PMI Data Across the Business Cycle Understand how to interpret Purchasing Managers' Index readings above and below 50 as real-time signals of economic expansion and contraction.

How Trade Openness Affects Long-Run Economic Growth Trade openness can accelerate long-run growth through technology transfer, larger markets, and competitive pressure—but empirical evidence is mixed and context matters deeply.

Human Capital Accumulation The build-up of education, skills, and health that drives long-term economic productivity and growth.

Hyperinflation Hyperinflation is extremely rapid inflation, usually defined as monthly inflation exceeding 50% (equivalent to roughly 13,000% annual inflation). It destroys the currency's value and the economy.

Hysteresis in Unemployment The phenomenon where temporary cyclical unemployment becomes permanent structural unemployment through skill decay, network loss, and stigma.

Ideas and Non-Rivalry in Growth Theory Why knowledge goods are non-rival, creating increasing returns that make competitive equilibrium break down and sustain indefinite growth.

Implicit Price Deflator Explained The implicit price deflator measures inflation by comparing nominal GDP to real GDP—a chained-weight index superior to fixed-basket methods for capturing structural change.

Import Quota vs Tariff: Key Differences Understand the key differences between import quotas and tariffs, including effects on price, volume, revenue, and economic rent capture.

Import Substitution Industrialization Explained Understand import substitution industrialization: the strategy of replacing imports with domestic production, its success and failure across regions.

Imported Inflation How exchange-rate depreciation and foreign price increases transmit into domestic consumer and producer prices.

Income Approach to GDP Measuring GDP by summing all factor incomes earned in production—wages, profits, rents, interest, and mixed income—reflecting output from the earnings side.

Increasing Returns to Scale and Long-Run Growth Why increasing returns to scale economic growth allows sustained expansion: how knowledge spillovers and network effects overcome diminishing returns in classical models.

Industrial Production Index A monthly measure of real output produced by manufacturing, mining, and utility sectors in an economy.

Industrial Production vs GDP: When They Diverge Industrial production vs GDP divergence: why manufacturing can fall while GDP grows in service-heavy economies.

Inequality and Economic Growth: What Theory Predicts Inequality and economic growth theory offers competing mechanisms: credit constraints, political distortion, savings, and human capital. Each predicts different growth outcomes.

Infant Industry Argument for Tariffs Explores the infant industry argument for tariffs—the case for temporary trade protection to help nascent domestic industries reach competitive scale.

Inflation Inflation is a sustained rise in the general price level of goods and services, eroding the purchasing power of money. Central banks target 2% annual inflation, and inflation profoundly affects wages, debts, stocks, and bonds.

Inflation and Income Inequality How inflation redistributes wealth between debtors and creditors, hurts lower-income households more, and widens income inequality.

Inflation During a Recession: How Prices Behave Inflation during a recession: how prices normally fall in downturns but sometimes rise (stagflation) when supply shocks dominate demand collapse.

Inflation Expectations The forward-looking price beliefs of households and firms that influence actual inflation through wage-setting, pricing decisions, and central bank policy.

Inflation Expectations Anchoring Explained How central banks keep long-run inflation expectations anchored near target and why broken anchoring spirals into wage-price inflation.

Inflation Measurement Problems and Biases How official inflation measures miss true price changes through substitution bias, quality adjustment flaws, and outlet shifts.

Inflation Surprise Actual inflation rate that significantly exceeds or falls short of consensus economic forecasts, affecting market expectations and policy.

Inflation Tax on Savings How inflation erodes the real purchasing power of cash and fixed-rate deposits, reducing the value of savings over time.

Initial Jobless Claims Initial jobless claims measure the number of people filing for unemployment insurance for the first time. It is the most timely labor market indicator.

Innovation vs Imitation as a Growth Strategy: A Growth-Theory Perspective Economies close to the technological frontier grow faster through innovation; followers grow faster through imitation until they narrow the gap and must innovate.

Institutions and Long-Run Growth How property rights, rule of law, and contract enforcement create the incentives that drive long-term economic growth.

International Reserves Central bank holdings of foreign currency and assets used to stabilize exchange rates and manage balance-of-payments crises.

Inventory Cycle The tendency of firms to overbuild and then liquidate stocks of goods, amplifying short-term swings in GDP and employment.

Inventory Investment Changes in business stockpiles of goods; a volatile GDP component that amplifies the business cycle and can mislead near-term growth readings.

Inventory-to-Sales Ratio as a Recession Signal How rising inventory-to-sales ratios historically precede economic downturns and signal weakening demand — a key leading indicator.

ISM Manufacturing PMI A monthly diffusion index of manufacturing expansion and contraction, published by the Institute for Supply Management and widely used as a leading economic indicator.

ISM Services PMI The non-manufacturing PMI tracking service-sector output, new orders, and employment across the largest segment of the US economy.