Macroeconomics

Sectoral Rotation Across the Business Cycle Which economic sectors outperform at each stage of the business cycle and why investors rotate between them as conditions shift.

Secular Stagnation A prolonged period of weak economic growth and low investment returns despite technological advances, driven by structural headwinds rather than cyclical weakness.

Service Sector Output Output from non-manufacturing activities like healthcare, finance, hospitality, and professional services.

Services Inflation vs Goods Inflation Services and goods inflate at different rates across business cycles. Services inflation is typically stickier, driven by labor costs; goods inflation is more volatile.

Services Trade vs Goods Trade: How They Differ Key differences between services trade and goods trade: measurement, regulation, consumer mobility, and role in offsetting merchandise deficits.

Services vs Goods: How GDP Composition Shifts Over Time Advanced economies have shifted from goods production (manufacturing, agriculture) to services (finance, healthcare, education). Learn why and what this means for GDP measurement.

Shelter Inflation Housing costs in the Consumer Price Index and why measured shelter inflation often lags actual rent and home-price changes.

Shrinkflation Explained Shrinkflation is a hidden form of inflation where manufacturers reduce product quantity instead of raising price. Learn how it works and why CPI misses it.

Soft Landing An economic slowdown that avoids recession by reducing inflation without triggering significant job loss or falling output.

Soft Landing vs Hard Landing: How Economists Define Each Outcome Soft landing vs hard landing recession: explains the two paths an economy can take when central banks tighten policy to fight inflation.

Solow Growth Model Framework for understanding long-run equilibrium through capital accumulation, labor force growth, and technological progress.

Solow Residual and Total Factor Productivity: The Mystery of Economic Growth How the Solow residual measures total factor productivity, why it captures more than just technology, and what it reveals about growth's true sources.

Sovereign Wealth Fund State-owned investment vehicles that deploy accumulated trade surpluses and resource revenues into global assets.

Stagflation Stagflation is the coexistence of high inflation and economic stagnation (low growth and high unemployment). It is a worst-case scenario that confounds traditional policy responses.

Stagflation: Causes, Mechanics, and Historical Examples Stagflation causes and examples: high inflation plus high unemployment—the toxic mix that challenges monetary policy and confounds standard economic models.

Sticky-Price CPI Sticky-price CPI tracks only items with infrequent price changes, such as rents, insurance, and healthcare. It reveals persistent underlying inflation better than headline CPI.

Structural Unemployment Structural unemployment is joblessness caused by mismatches between jobs available and workers' skills or location, rather than weak demand. It is a permanent feature of labor markets.

Structural vs Cyclical Unemployment: Key Differences Structural vs cyclical unemployment: distinguishes job losses from industry shifts (structural) from those caused by recessions and business cycles (cyclical).

Substitution Bias in Inflation Systematic overstatement of inflation caused by CPI baskets that don't adjust for consumer substitution behavior when relative prices shift.

Substitution Effect in Price Index Construction The substitution effect describes how consumers shift toward cheaper goods when prices rise; fixed-weight price indexes overstate inflation by ignoring this shift.

Sudden Stop in Capital Flows The abrupt reversal of foreign capital inflows into emerging markets, causing currency depreciation and balance-of-payments crisis.

Supercore Inflation Core services inflation minus shelter, the Federal Reserve's preferred gauge of persistent labour-cost-driven price pressure.

Tariff An import tax that protects domestic producers and redistributes welfare between consumers, firms, and government revenue.

Technical Recession A popular rule defining recession as two consecutive quarters of negative real GDP growth, distinct from official recession dating by the NBER.

Technological Spillover How innovation and knowledge diffuse from leading firms to competitors and across industries, raising economy-wide productivity.

Terms of Trade Deterioration in Developing Countries Why commodity-exporting developing economies face long-run declines in export prices relative to manufactured imports, and the implications for growth and development.

Terms of Trade Explained Terms of trade is the ratio of export prices to import prices; a shift affects a country's real purchasing power from international exchange.

Terms of Trade: How Import and Export Price Ratios Affect an Economy Terms of trade: the ratio of export prices to import prices. When it improves, a nation's real purchasing power rises; when it worsens, real wealth falls.

The Four Phases of the Business Cycle Explained The four phases of the business cycle—expansion, peak, contraction, and trough—form the heartbeat of economic activity. Learn what signals each stage.

The Mankiw-Romer-Weil Model: Human Capital and Cross-Country Income How the MRW extension of Solow adds human capital accumulation to explain income differences between nations.

The Natural Resource Curse: Why Abundant Resources Can Slow Growth How the natural resource curse through Dutch disease and rent-seeking can depress long-run economic growth, even in resource-rich nations.

The Solow Residual Explained The Solow residual measures the portion of economic output growth not explained by capital and labor inputs. It captures technological progress, efficiency gains, and measurement error.

The Yield Curve as a Recession Signal Why an inverted yield curve has historically preceded recessions, what the inversion measures, and its limitations as a forecasting tool.

Total Factor Productivity The portion of economic output growth unexplained by capital and labor inputs, representing technological progress and efficiency gains.

Trade Balance The difference between a nation's imports and exports of goods and services, and a key component of the current account in the balance of payments.

Trade Credit in the Balance of Payments How supplier credit and buyer advances appear in the financial account and why they signal liquidity stress or economic strength.

Trade Deficit Era Period when a country imports more goods than it exports, reshaping industrial policy and currency dynamics.

Trade War A cycle of escalating tariff increases and trade barriers between two or more countries, typically in retaliation for perceived unfair trade practices.

Transfer Pricing and Its Effect on Trade Statistics How multinational transfer pricing distorts bilateral trade balances and reported import-export figures in balance of payments data.

Transitional Dynamics in Growth Models Transitional dynamics describe how capital, consumption, and output adjust during the path to a steady state, and why the speed matters for policy.

Trimmed-Mean CPI Trimmed-mean CPI excludes the items with the largest and smallest price increases each month, revealing the underlying inflation trend without extreme outliers.

Trough The lowest point in the business cycle before economic recovery begins; marks the end of recession and onset of expansion.

Twin Deficits The tendency of a country's fiscal deficit and current-account deficit to move together and reinforce each other.

Twin Deficits Hypothesis The theory that fiscal deficits and current account deficits are linked through national saving and investment.

Two-Sector Growth Models Two-sector growth models explain how resource allocation between goods production and R&D sectors determines long-run economic growth rates.

U-3 Unemployment U-3 unemployment is the official unemployment rate reported by the Bureau of Labor Statistics. It measures the percentage of the labor force actively seeking work but unable to find a job.

U-6 Unemployment U-6 unemployment is a broader measure of labor market slack that includes discouraged workers, marginally attached workers, and involuntary part-time workers alongside the officially unemployed.

Underemployment Employment below a worker's skill level or hours preference, hiding true labour-market weakness behind headline employment figures.

Underground Economy Output Methods for estimating shadow-economy activity—informal work, cash transactions, and illegal trade—that official GDP misses.

Unemployment Duration Distribution and Long-Term Joblessness How unemployment duration distribution shows that long-term unemployed face much steeper barriers than short-term jobless, and why duration dependence matters for policy.

Unemployment Rate The unemployment rate is the percentage of the labor force that is actively seeking work but cannot find a job. It is the most widely cited labor market statistic.

Unified Growth Theory Explained: From Malthusian Stagnation to Sustained Growth How Galor and Weil's unified growth theory connects the Malthusian era to modern sustained growth through human capital and demographic transition.

Unit Labor Cost Labour compensation per unit of output, a key signal of cost-push inflation pressure in domestic economies.

V-Shaped Recovery A sharp post-recession rebound where output falls steeply then snaps back quickly to pre-crisis levels with minimal slack.

Valuation Effects in the International Investment Position Understand how exchange-rate and asset-price changes affect a country's net international investment position independently of current-account flows.

Varieties of Goods Growth Model: Innovation Through Product Diversity How the varieties of goods model explains economic growth through the expansion of product lines rather than quality improvements.

Velocity of Money The rate at which a unit of currency circulates through the economy, linking money supply to nominal GDP.

Verdoorn's Law The positive feedback loop in which faster output growth in manufacturing drives productivity gains, and vice versa, creating a self-reinforcing cycle.

Voluntary Export Restraint Explained Learn how voluntary export restraints work as negotiated quotas imposed by exporting countries, why they surged in the 1970s–80s, and their welfare costs.

W-Shaped Recession A W-shaped recession features two contractions separated by a brief recovery. Learn what causes double-dips and historical examples.