Routledge Dictionary of Economics Second edition The most informative dictionary of economics available, the Routledge Dictionary of Economics avoids the tendency to indulge in long-winded definitions of the major concepts and provides students with a lucid, comprehensive and accurate guide to the discipline. Employing the key feature of further reading with many of the terms, the book uses the subject classification system defined by the Journal of Economic Literature and The Economic Journal. There have been sweeping developments in economics in the decade since the appearance of the first edition of the dictionary and the new version reflects this by including a wealth of material on additional topics, including: . economic anthropology . Blairism . endogenous growth theory . French Circuit School . output floor regulation . predator–prey models. The dictionary has been compiled for the needs of students and teachers of economics, finance, accountancy and business studies and should prove to be an invaluable resource. Donald Rutherford is Lecturer in Economics and Associate Dean of the Faculty of Social Sciences at the University of Edinburgh. © 2002 Donald Rutherford Routledge Dictionary of Economics Second edition Donald Rutherford London and New York © 2002 Donald Rutherford First published in 1992 as the Dictionary of Economics Second edition published 2002 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group # 2002 Donald Rutherford All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book has been requested ISBN 0–415–25090–0 (hbk) ISBN 0–415–25091–9 (pbk) This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” ISBN 0-203-00054-4 Master e-book ISBN © 2002 Donald Rutherford Contents Preface to the first edition Preface to the second edition List of abbreviations DICTIONARY OF ECONOMICS Appendices Subject classifications © 2002 Donald Rutherford Preface to the first edition Economics, the Queen of the Social Sciences, has now established itself as a major subject in dialogue with the physical sciences, law and the arts. There are few aspects of human behaviour that do not have an economic dimension and little of current affairs can be understood without a knowledge of economic principles. It is, therefore, not surprising that it is a major discipline in schools, colleges and universities throughout the world, studied by millions and the topic of conversation of millions more. The Routledge Dictionary of Economics has as its concerns as many issues as the subject Economics now covers. The breadth can be appreciated by considering the subject classifications used by the Journal of Economic Literature (USA) and The Economic Journal (UK). The related specialties of economic history, commercial law, and econometric and statistical techniques are all within its ambit. However, to prevent a subject dictionary becoming encyclopedic, a lexicographer can follow the useful conventions of taking from sister disciplines only what is regularly used in mainstream economic literature. For example, from law, it is customary to emphasize competition, fiscal and banking law more than constitution al or criminal law. This interpretation of economics in the broad sense makes a dictionary of this kind more of a dictionary for economists, rather than a dictionary of economics with terms peculiar to the subject. Even if a dictionary takes a broad view of its subject matter, it is usually addressed to a particular audience, such as first-year undergraduates. This is an approach that I have wanted to avoid, as there is a substantial heterogeneity of economics courses and students often need to research some areas of the subject in more depth than others. Also, it can be patronizing to the general reader to regard all of his or her knowledge to date as rudimentary. Even the reader of the daily newspapers who never looks at an economics textbook will encounter the most complex of ideas, chaos theory for example. To produce a dictionary of this kind, I started with an assortment of basic textbooks and many current newspapers and journals. I soon discovered that about a thousand concepts are common to all the textbooks, for example notions of cost, economic systems and banking. From general textbooks I moved to a © 2002 Donald Rutherford perusal of specialist books on the diverse divisions of the subject. The areas of economics encompassed obviously have to reflect current concerns; m any environmental concepts are included and the ‘male’ character of many economics works has been partially avoided by including biographies of several leading female economists. Newspapers and journals provide a modern guide to current economic discourse. There is no foreseeable end to the creation of economic neologisms – major events such as the deregulation of financial markets and the political developments in Eastern Europe, which have changed the nature of many economies, have produced an expansion of new terms. Some terminology is ephemeral but many words that start as slang, such as ‘yuppy’, have a surprising longevity. I have taken the optimistic view that numerous catchwords and catchphrases will render linguistic service for many years. The entries in this Dictionary are sequenced alphabetic ally letter by letter: for example, discounted share price precedes discount house, which precede discounting. The standard form for each item included begins with a headword followed by one or more single letter and number codes to indicate the branch or branches of economics that most frequently use that term. As it is important to ensure that all entries are immediately comprehensible and independent of the others, the text of each entry begins with a short definition before any discussion is included. Where related entries can profitably be read in conjunction, reference is made to them. Standard diagrams are included in the entries that require them. For the longer or more difficult entries, references to other works that either indicate the original use of that idea or provide a modern discussion of it are given. A dictionary is a solace for the perplexed, a guide for the scholar and a map of a new terrain for the general reader. I hope that this Routledge Dictionary of Economics is all of these. © 2002 Donald Rutherford Preface to the second edition Ten years have elapsed since the first edition of this Dictionary. The vocabulary of economics in the broadest sense has considerably grown. Many neologisms have sprung from continued changes in national economies, not least the innovations in financial markets and growing concerns about the environment. Institutional changes, for example, the coming of the World Trade Organisation, and new interests in economic thought, not least through the further awards of Nobel Prizes for Economics, have inspired new entries. Inevitably some terms in the first edition have not been as durable as others and recommended reading needed revision. Extensive reading of economics journals and monographs, as well as newspapers, has produced over a thousand new entries. The organisation of the Dictionary has also been changed. The newer version of the subject classification employed by the Jo urnal of Economic Literature and The Economic Journal has been applied to previous and new entries. There is now a separate listing of abbreviations and acronyms, together with tables for currencies and stock market indexes. Without the resources of major libraries this new edition could not have been undertaken. I am grateful for having access to Edinburgh University Library, Cambridge University Library, and to the Economics Library and Bodleian Library of Oxford University. Colleagues and friends have been very supportive. In particular I would like to mention Graham Richardson, Stuart Sayer, John Gordon and Gillian Gordon. © 2002 Donald Rutherford Abbreviations AARCH augmented autoregressive conditional heteroscedasticity AC advanced country ACAS Advisory, Conciliation and Arbitration Service ACH automated clearinghouse ACM Andean Common Market; Arab Common Market ACP African, Caribbean and Pacific ACRS Accelerated Cost Recovery System ACT advanced corporation tax AD anti-dumping AD–AS aggregate demand–aggregate supp ly ADB Asian Development Bank ADR American Depository Receipt AEA American Economic Association AESOP all-employee share ownership plan (UK) AFBD Association of Futures Brokers and Dealers (London) AfDB African Development Bank AFDC Aid to Families with Dependent Children AFL–CIO American Federation of Labor and Congress of Industrial Organizations AG Aktiengesellschaft AGM Annual General Meeting AGNP augmented gross national product AIBD Association of International Bond Dealers AIM Alternative Investment Market (London) ALC Australian Loan Counci l ALM asset-liability management AMEX American Stock Exchange AMU Arab Maghreb Union ANOVA analysis of variance AOSIS Alliance of Small Island States APACS Association for Payment Clearing Services © 2002 Donald Rutherford APB Accounting Principles Board (UK) APC average propensity to consume APCIMS Association of Private Client Investment Managers and Stock- brokers APR average percentage rate (of interest) ARCH autoregressive conditional heteroscedasticity Ariel Automated Real-time Investment Exchange ARIMA autoregressive integrated moving average ARM adjustable rate mortgage ARMA autoregressive moving average ASEAN Association of South East Asian Nations ATM automated teller machine; air transport movement ATP Aid and Trade Provisions ATS automatic transfer from a savings account; automatic transfer service account BACS Banks Automated Clearing System (UK) BAT best available technology BCEAO Banque Central e des Etats de l’A frique de l’Ouest (Central Bank of West African States) b/d barrels per day BDI Bundesverrand der deutschen Industrie BDR British Depository Receipt BEA Bureau of Economic Analysis (USA) BERD La banque europe ´ enne pour la reconstruction et la de ´ veloppe- ment (European Bank for Reconstruction and Development) BIDS British Institute of Dealers in Securities BIS Bank for International Settlements BNB basic needs budget BOF Balance for Official Financing BOY beginning of the year (or of an accounting period) bp base points (of an interest rate) BP balance of payments BRITE Basic research in industrial technologies for Europe C aggregate consumption C-20 Committee of Twenty CA confluence analysis; chartered accountant CAC Central Arbitration Committee; Consumer Advisory Council (USA) CACM Central American Common Market CAP Common Agricultural Policy CAPM capital asset pricing model CAR compounded annual rate (of interest) CARICOM Caribbean Community © 2002 Donald Rutherford CARIFTA Caribbean Free Trade Area CAT Charges, Access, Terms CATS Computer-assisted Trading System CBD central business district (of a city) CBI Caribbean Basin Initiative; Confederation of British Industry CBO Congressional Budget Office (USA) CBOE Chicago Board Options Exchange CC Competition Commission (UK) CCC Commodity Credit Corporation (USA); Competition and Credit Control (UK) CCT compensating common tariff; compulsory competitive tendering CD Certificate of Deposit CDB Caribbean Development Bank CEA Council of Econom ic Advisers CEAO Communaute ´ Economique de l’Afrique de l’Ouest CEC Commission of the European Communities CENIS Centre for International Studies CEMAC Communaute ´ Economique et Monetaire en Afrique Centrale (Central African Economic and Monetary Community) CEO Chief Executive Officer CEPAL Commisio ´ n Economica para Ame ´ rica Latina CEPGL Communite ´ e ´ conomique des Pays des Grands Lacs CES constant elasticity of substitution CET common external tariff CETA Comprehensive Employment and Training Act CEV constant elasticity of variance CFA Communaute ´ Financie ` re Africaine; chartered financial analyst CFF compensatory financial facility CFTC Commodity Futures Trading Commission CGE computable general equilibrium CGT capital gains tax CHAPS Clearing House Automatic Payments System (UK) CHIPS Clearing House Interbank Payments System (New York) c.i.f. cost, insurance, freight CIR Commission on Industr ial Relations (UK) CIS cash incentive scheme CITES Convention on International Trade in Endangered Species CMB Cash Management Bill CMEA Council for Mutual Economic Aid CMO collateralized mortgage obligation CMSA Consolidated Metropolitan Statistical Area CO Certification Officer COB Commission des Ope ´ rations de Bourse (the Stock Exchange Commission of France) COLA cost of living adjustment © 2002 Donald Rutherford [...]... Universities He was on the staff of the National Bureau of Economic Research from 19 38 to 19 42 and Director of Business Cycles Study from 19 46 to 19 48; principal economist of the War Production Board in 19 42 before serving in the US Army; and professor at Columbia University, 19 40–2 and 19 46–8, and of Stanford University, 19 48–77 After early work on price theory, he turned to a study of inventories and business... from 10 0 per cent to 67 per cent Akerlof, George Arthur, 19 40– (B3) Born in New Haven, Connecticut, and educated at Yale University and the Massachusetts Institute of Technology A professor at the University of California, Berkeley, from 19 68 to 19 78, at the London School of Economics from 19 78 to 19 80 and again at Berkeley from 19 80 Won the NOBEL PRIZE FOR ECONOMICS, with STIGLITZ and SPENCE, in 20 01. .. Edward Burghardt Du Bois (18 68 19 63), Sadie Tanner Mossell Alexander (18 98 19 89), George Edmund Haynes (18 80 19 60) and William Henry Dean Jr (19 10–52) Their work has included the study of MIGRATION, DISCRIMINATION and LO CATION THEORY African Development Bank (G2) A bank operating from 19 66: it finances investment projects in Africa and raises capital throughout the world By 19 85, it had fifty African... References Carter, M., Casson, M and Suneja, V (19 98) The economics of marketing, Cheltenham, UK, and Northampton, MA: Edward Elgar Reekie, W.D (19 81) The Economics of Advertising, London: Macmillan Schinalensee, R (19 72) The Economics of Advertising, Amsterdam: North-Holland Advisory, Conciliation and Arbitration Service (J5) The central UK body, set up in 19 74 under the TRADE UNION AND LABOUR RELATIONS... the subdivision of labour would unfortunately affect workers as repetitive simple work dulls the brain and causes a variety of occupational health problems Allais, Maurice, 19 11 (B3) Educated at the Ecole Polytechnique and ´ the Ecole Superieure des Mines before serving in the army from 19 43 to 19 48 Director of the Bureau of Mines Documentation and Statistics, Paris and professor of economic analysis... (managerial economics) See also: transaction cost References administrative costs of regulation (H1, L5) All the costs of employing officials and running the offices of regulatory agencies These are contrasted with COMPLIANCE COSTS Wrigley, E.A (19 88) Continuity, Chance and Change, ch 2, Cambridge: Cambridge University Press ad valorem tax (H2) An INDIRECT TAX levied as a percentage of the value of a transaction... in 18 85 and based at Evanston, Illinois (now at Nashville,Tennessee).Fromitsearliestyearsit has sought to promote economic research, particularly by publishing its prestigious American Economic Review, a core journal of economics, from 19 11 and Journal of Economic Literature from 19 63 The AEA currently has over 25,000 members References Coats, A.W (19 85) ‘The American Economic Association and the economics. .. name in 19 53 and was incorporated in 19 71; by 19 87 it had 6 61 regular members with 60 per cent of its business with private clients and 40 per cent with institutional investors It ended fixed commissions on dealings in 19 75 and from 19 85 has been linked to the Toronto Stock Exchange See also: New York Stock Exchange America Works (I3) US private company founded in 19 84 It seeks to get people off welfare... Contribution to the Theory of the Trade Cycle, Oxford: Clarendon Press (reprinted 19 78) Knox, A D (19 52) ‘The acceleration principle and the theory of investment: a survey’, Economica, New Series 19 : 269–97 Lundberg, E (19 37) Studies in the Theory of Economic Expansion, Oxford: Basil Blackwell (reprinted 19 55) accepting house (G2) A UK merchant bank which, by approving a commercial bill of exchange, created... Journal of Economic Literature 16 (September): 919 –62 Lee, R.D., Arthur, W.B and Rodgers, O (eds) (19 89) Economics of Changing Age Distributions in Developed Countries, Oxford: Oxford University Press ageing population (J1) 1 population with an increasing proportion of its population in older age groups, often because a large group born in a period of high birth rate is maturing 2 A population with . Routledge Dictionary of Economics Second edition The most informative dictionary of economics available, the Routledge Dictionary of Economics avoids the tendency. this Routledge Dictionary of Economics is all of these. © 2002 Donald Rutherford Preface to the second edition Ten years have elapsed since the first edition of this Dictionary. The vocabulary of economics. interpretation of economics in the broad sense makes a dictionary of this kind more of a dictionary for economists, rather than a dictionary of economics with terms peculiar to the subject. Even if a dictionary