Intertemporal Equilibrium

AAA

DEFINITION of 'Intertemporal Equilibrium'

An economic concept that holds that the equilibrium of the economy cannot be adequately analyzed from a single point in time, but instead should be analyzed across different periods of time. According to this concept, households and firms are assumed to make decisions that affect their finances and business prospects by assessing their impact over lengthy periods of time rather than at just one point.

INVESTOPEDIA EXPLAINS 'Intertemporal Equilibrium'

An example of an individual making an intertemporal decision would be one who invests in a retirement-savings program, since he or she is deferring consumption from the present to the future. Intertemporal decisions made by companies include decisions on investment, staffing and long-term competitive strategy.

RELATED TERMS
  1. Equilibrium

    The state in which market supply and demand balance each other ...
  2. Marginal Utility

    The additional satisfaction a consumer gains from consuming one ...
  3. Intertemporal Choice

    An economic term describing how an individual's current decisions ...
  4. Time Horizon

    The length of time over which an investment is made or held before ...
  5. Long Term

    Holding an asset for an extended period of time. Depending on ...
  6. Nordic Model

    The social welfare and economic systems adopted by Nordic countries.
Related Articles
  1. Economics

    A Practical Look At Microeconomics

    Learn how individual decision-making turns the gears of our economy.
  2. Taxes

    Beeronomics: Factors Affecting Your Pint

    Beer is a complex beverage shaped by supply and demand, production and distribution, with regulation thrown in for that extra kick.
  3. Investing

    What's the difference between macroeconomics and microeconomics?

    Microeconomics is generally the study of individuals and business decisions, macroeconomics looks at higher up country and government decisions. Macroeconomics and microeconomics, and their wide ...
  4. Economics

    How does a high discount rate affect the economy?

    Find out what would happen if the Federal Reserve decided to set a very high discount rate, the rate at which banks can borrow money from the Federal Reserve.
  5. Professionals

    How do companies measure labor supply in human resources planning?

    Find out how and why a company's human resources department would measure labor supply, and what policies would address a shortage or surplus.
  6. Economics

    No Exit: What Could Happen If the Eurozone Breaks Up?

    There is no exit strategy for nations in the eurozone or the EU because most members acknowledge that they are far better off together than apart.
  7. Fundamental Analysis

    Why are OTC (over-the-counter) transactions controversial?

    Learn more about over-the-counter transactions, and why OTC traders are considered riskier than traders working with larger market exchanges.
  8. Fundamental Analysis

    What is the difference between cost of equity and cost of capital?

    Read about some of the differences between a company's cost of equity and its cost of capital, two measures of its required returns on raised capital.
  9. Economics

    How do economies of scale work with globalization?

    Discover how globalization can lead to unprecedented economies of scale for firms across the world, leading to higher global efficiency and productivity.
  10. Fundamental Analysis

    What is arbitrage pricing theory?

    Find out what arbitrage pricing theory is and how it can theoretically be used by investors to generate risk-free profit opportunities.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center