Intertemporal Equilibrium

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.

BREAKING DOWN '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. Intertemporal Choice

    An economic term describing how an individual's current decisions ...
  2. General Equilibrium Theory

    General equilibrium theory studies supply and demand fundamentals ...
  3. Economic Equilibrium

    A condition or state in which economic forces are balanced. These ...
  4. Competitive Equilibriums

    An equilibrium condition where the interaction of profit-maximizing ...
  5. Equilibrium

    The state in which market supply and demand balance each other ...
  6. Recursive Competitive Equilibrium ...

    An equilibrium concept associated with dynamic programs. Recursive ...
Related Articles
  1. Term

    What Is Equilibrium?

    Equilibrium is a state of balanced supply and demand.
  2. Term

    What Is Economic Equilibrium?

    Economic equilibrium occurs when market supply is equal to market demand.
  3. Investing

    The Science of Making Better Investment Decisions

    Neuroeconomics attempts to bridge neuroscience, cognitive psychology and economics in order to understand the mechanisms underlying economic decision making.
  4. Forex

    Understanding The Time Value Of Money

    The time value of money is a fundamental concept in finance - and it influences every financial decision you make, whether you know it or not. Learn the basics here.
  5. Economics

    The Nash Equilibrium

    Nash Equilibrium is a key concept of game theory, which helps explain how people and groups approach complex decisions. Named after renowned mathematician John Nash, the idea of Nash Equilibrium ...
  6. Options & Futures

    Financial Concepts: Introduction

    The world of investing can be a cold, chaotic and confusing place. In this tutorial, we'll go through some of the theories that investors have developed in an effort to explain the behavior ...
  7. Professionals

    Basic Economic Concepts

    NASAA Series 65: Section 15 Basic Economic Concepts
  8. Professionals

    Introduction

    Introduction. An introduction to Economics with a focus on microeconomics.
  9. Trading Systems & Software

    Build a Profitable Trading Model In 7 Easy Steps

    Trading models can provide a powerful tool for building profit. Traders can use and customize existing trading models or build an original model. This article provides seven steps to building ...
  10. Economics

    What is Deadweight Loss?

    Deadweight loss can be applied to any deficiency caused by an inefficient allocation of resources.
RELATED FAQS
  1. What is general equilibrium theory in macroeconomics?

    Achieving equilibrium of prices in a single or multi-market setting involves a bidding process that is informed precisely ... Read Answer >>
  2. What does the Nash equilibrium predict?

    Learn more about the famous Nash equilibrium, which is the revolutionary concept in game theory about the economics of human ... Read Answer >>
  3. How is game theory related to the Nash equilibrium?

    Learn how Nash's equilibrium is an important concept in game theory, and understand how it applies to the common prisoner's ... Read Answer >>
  4. Why are there no profits in a perfectly competitive market?

    See why economic profits are theoretically impossible in a perfectly competitive market and why some economists use perfect ... Read Answer >>
  5. What is the difference between a dominant strategy solution and a Nash equilibrium ...

    Dive into game theory and the Nash equilibrium, and learn why the Nash equilibrium assumptions about information are less ... Read Answer >>
  6. How does a lack of demand affect financial markets?

    Discover how a lack of demand affects financial markets. A lack of demand leads to a new price equilibrium, as prices dramatically ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center