Macroeconomics

J-Curve Effect The temporary worsening of a trade balance following currency depreciation before eventual improvement.

J-Curve Effect on Trade Balance After a Currency Depreciation Understand why a currency depreciation initially worsens a trade balance before improving it—the J-curve effect in international trade.

Job Creation Rate The job creation rate measures the monthly or annual pace of new employment gains across the economy, a key indicator of economic health.

Job Ladder Theory in Labor Economics Job ladder theory in labor economics: explains how workers move to higher-paying firms over their careers and how this model connects wage growth, job mobility, and productivity.

Job Openings Filled Rate Proportion of available job openings that are successfully filled with workers, indicating labor market tightness.

Job Polarization Job polarization and middle-skill jobs: how automation hollows out routine occupations while expanding high-skill and low-skill employment extremes.

Job Separation Rate The fraction of employed workers exiting their jobs each period through quits, layoffs, and other separations.

Jobless Recovery An economic expansion in which output and productivity grow but employment remains depressed, delayed relative to GDP recovery.

JOLTS Report The JOLTS report (Job Openings and Labor Turnover Survey) tracks job openings, hires, quits, and separations monthly. It provides a detailed view of labor market dynamics.

K-Shaped Recovery A post-recession rebound in which higher-income segments recover quickly while lower-income groups remain depressed or decline further.

Kaldor's Stylised Facts Six empirical regularities of capitalist economies that any credible growth model must explain.

Knowledge Externality in Production How R&D by one firm raises the productivity of others without market compensation, creating a case for growth subsidies.

L-Shaped Recession A severe contraction followed by a prolonged, stagnant trough with minimal recovery for several years.

Labor Force Participation Among Older Workers Labor force participation among older workers—those 55 and over—follows distinct cyclical and secular patterns, driven by health, retirement timing, and economic necessity.

Labor Force Participation Rate The labor force participation rate is the percentage of the working-age population that is either employed or actively seeking employment. It measures the size of the economically active population.

Labor Force Participation Rate: What It Measures and Why It Matters The labor force participation rate measures the share of the working-age population that is employed or actively seeking work. Structural trends like aging and disability have pulled it lower for two decades.

Labor Hoarding The practice of firms retaining surplus workers during economic downturns rather than laying them off, dampening unemployment but weighing on productivity.

Labor Hoarding During Recessions: Why Firms Keep Workers Why companies retain workers even as output falls during recessions, and how this affects productivity and employment recovery.

Labor Market Flows Model Labor market flows hiring separation model: a stock-and-flow framework tracking workers moving monthly between employment, unemployment, and out-of-labor-force.

Labor Market Matching Efficiency Labor market matching efficiency measures how well job seekers and open positions connect, determining whether unemployment persists even when vacancies exist.

Labor Market Monopsony Market power held by a single or small group of dominant employers who suppress wages below the competitive level by restricting hiring and restricting worker mobility.

Labor Market Power and Wage Setting Labor market power refers to an employer's ability to pay workers below competitive levels. Concentration, search costs, and non-competes suppress wages despite low unemployment.

Labor Market Scarring After a Recession How workers displaced during downturns suffer persistent wage penalties and reduced career mobility even after rehiring.

Labor Market Slack The underutilization of labor resources in an economy, measured as the degree to which unemployment exceeds the natural rate.

Labor Market Tightness by Industry Sector Labor market tightness by sector measures vacancy-to-unemployment ratios that reveal which industries face acute labour scarcity versus surplus, signalling wage pressure and hiring ease.

Labor Productivity Labor productivity measures the output produced per hour of work. It is the primary determinant of long-run wage growth and is tracked closely by central banks and economists.

Labor Supply Constraints Structural factors limiting the availability of workers in specific occupations, regions, or skill levels, constraining production capacity.

Labour Market Tightness The ratio of job vacancies to unemployed workers, measuring whether employers or job-seekers hold the upper hand in hiring negotiations.

Laspeyres Price Index A fixed-base price index that holds quantities constant and systematically overstates inflation, especially when prices rise unevenly across categories.

Leading Economic Indicators A composite index of variables that historically shift direction before the broader economy, signalling recession and recovery.

Leading Indicator Economic variables that systematically turn before the overall economy does, used to forecast recessions and expansions.

Learning by Doing in Economic Growth How learning by doing economics drives endogenous productivity growth through cumulative production experience and raises long-run growth rates.

Liquidity Trap and Deflation: Why Monetary Policy Loses Traction Understand the liquidity trap — when falling prices and zero interest rates prevent central banks from stimulating the economy through monetary policy alone.

Liquidity Trap: When Monetary Policy Loses Its Power Why a liquidity trap monetary policy explained: how cutting rates to zero fails to stimulate the real economy when demand collapses and risk aversion dominates.

Lucas Paradox Why capital flows away from poor countries despite their apparent higher marginal product of capital—a puzzle about global investment patterns.

Malthusian Trap The pre-industrial equilibrium where rising agricultural output triggers population growth that erodes per-capita income gains.

Manufacturing Output Share of GDP The declining fraction of factory output in national income; a structural marker of developed economies and deindustrialisation.

Marshall-Lerner Condition The elasticity threshold determining whether a currency depreciation improves the trade balance.

Measuring GDP in a Small Open Economy vs a Large Economy GDP measurement in small open economies: why trade flows, remittances, and profit-shifting distort the metric more than in large, domestically driven economies.

Median CPI The inflation rate of the middle item in the price-change distribution, isolating core inflation from transitory swings.

Menu Costs in Economics Explained Menu costs are the real costs firms incur to change prices—labor, printing, systems updates. They explain price stickiness and why inflation doesn't adjust instantly.

Mid-Cycle Slowdown: What It Is and How It Differs from Recession A mid-cycle slowdown is a temporary deceleration of growth during an expansion without crossing into recession. Learn how to distinguish it from contraction.

Minsky Moment The sudden onset of financial distress and asset price collapse when speculatively-funded borrowers can no longer service their debt.

Misery Index A simple measure of economic hardship calculated by adding the unemployment rate and the inflation rate.

Multifactor Productivity Multifactor productivity (also called total-factor productivity) measures output growth that cannot be explained by increases in labor and capital inputs. It captures technological progress and organizational efficiency.

NAIRU NAIRU (Non-Accelerating Inflation Rate of Unemployment) is the unemployment rate consistent with stable inflation. Below NAIRU, inflation accelerates; above it, inflation decelerates.

Natural Rate of Growth Harrod's concept of the steady-state growth rate consistent with full employment of a growing labour force and accumulating capital.

Natural Rate of Unemployment The natural rate of unemployment is the unemployment rate consistent with stable inflation and no demand-side pressure. It reflects structural and frictional unemployment.

NBER Business Cycle Dating How the NBER Dating Committee officially determines recession start and end dates using broad economic indicators.

Negative GDP Growth for Two Consecutive Quarters The two-quarter recession rule explained: why the popular definition diverges from official recession dating, and what it misses.

Net Domestic Product Gross Domestic Product adjusted for capital depreciation, revealing the output available for consumption or saving after accounting for wear and tear.

New Home Sales Price Index A measure of price changes in newly constructed residential properties, tracking affordability and construction-cost inflation in the housing market.

Nominal GDP Nominal GDP is the total market value of goods and services produced in a country, measured in current prices. It conflates both growth in production and inflation.

Nominal vs Real GDP: How Inflation Distorts Growth Figures How the GDP deflator strips inflation from nominal output so real economic growth can be compared across years and the true productivity gains measured.

Nominal vs Real Wage Growth Nominal vs real wage growth difference: inflation erodes nominal raises, making real purchasing power the true measure of whether workers get ahead.

Non-Tariff Barriers: Types and Trade Effects Non-tariff barriers restrict international trade through regulations, standards, and quotas rather than explicit tariffs. Learn the main categories and their impact.

Nonemployment Index: A Broader Jobless Measure An alternative unemployment metric that weights all jobless states by their distance from employment, capturing underemployment and workforce exit better than U-3.

Nonfarm Payrolls Nonfarm payrolls measure total employment in the US excluding farm workers, self-employed, and government. The monthly change in payrolls is one of the most important economic statistics.

Okun's Law The empirical relationship between changes in the unemployment rate and changes in real output growth.

On-the-Job Search Workers seeking new positions while employed, and how job-to-job transitions reshape wages and labour market efficiency.