POLICY LAGS: A series of lags between the onset of an economic problem, such as business-cycle contraction, and the full impact of the policy designed to correct the problem, such as expansionary fiscal or monetary policy. Policy lags can take several years and are one of the key arguments against discretionary policies and for reliance on self correction and automatic stabilizers. Policy lags are often divided into inside lags, the time between the shock and the corrective policy, and outside lags, the time between the corrective policy and full impact on the economy.

     See also | economic policies | stabilization policies | inside lag | outside lag | recognition lag | implementation lag | self correction | discretionary policy | automatic stabilizers | business cycle | contraction |

POLICY LAGS, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: December 13, 2025].

Additional information on this term can be found at:

WEB*pedia: policy lags

Back to the GLOSS*arama

The macroeconomic study of Keynesian economics relies on three key assumptions--rigid prices, effective demand, and savings-investment determinants. First, rigid or inflexible prices prevent some markets from achieving equilibrium in the short run. Second, effective demand means that consumption expenditures are based on actual income, not full employment or equilibrium income. Lastly, important savings and investment determinants include income, expectations, and other influences beyond the interest rate. These three assumptions imply that the economy can achieve a short-run equilibrium at less than full-employment production.

Complete Entry | Visit the WEB*pedia

Today, you are likely to spend a great deal of time flipping through the yellow pages seeking to buy either an ink cartridge for your printer or a rechargeable battery for your camera. Be on the lookout for the happiest person in the room.
Your Complete Scope

This isn't me! What am I?

-- Peter F. Drucker, author

User Feedback