Recognition Lag

AAA

DEFINITION of 'Recognition Lag'

The time lag between when an actual economic shock, such as sudden boom or bust occurs, and when it is recognized by economists, central bankers and the government.

The recognition lag is studied in conjunction with implementation lag and response lag, two other measures of time lags within an economy. Recognition lags may be days, weeks, or months, depending on the nature and severity of the economic shock or shift.

INVESTOPEDIA EXPLAINS 'Recognition Lag'

Followers of the market are familiar with the phenomenon of when economists signal a recession in the economy several months after it has actually begun. This is because it can take several months for data metrics that are studied to predict economic shifts to be aggregated and published for the investing public.

RELATED TERMS
  1. Discount Rate

    The interest rate charged to commercial banks and other depository ...
  2. Recession

    A significant decline in activity across the economy, lasting ...
  3. Discount Window

    Credit facilities in which financial institutions go to borrow ...
  4. Implementation Lag

    The time lag between when a macroeconomic shock or other adverse ...
  5. Response Lag

    The time lag between when a corrective action is taken in the ...
  6. Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members ...
Related Articles
  1. Breaking Down The Fed Model
    Bonds & Fixed Income

    Breaking Down The Fed Model

  2. How The U.S. Government Formulates Monetary ...
    Personal Finance

    How The U.S. Government Formulates Monetary ...

  3. Explaining The World Through Macroeconomic ...
    Options & Futures

    Explaining The World Through Macroeconomic ...

  4. The Importance Of Inflation And GDP
    Economics

    The Importance Of Inflation And GDP

comments powered by Disqus
Hot Definitions
  1. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  2. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  3. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  6. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
Trading Center