Backdoor Monetary Policy
Non-transparent central bank actions that influence liquidity, rates, or markets outside standard public channels.
Backward Induction
A method for solving sequential games or decisions by analyzing from the final stage back to the first.
Backward Integration
Expansion by a firm into the production or control of its own inputs.
Backward-Bending Supply Curve
A labor supply curve that slopes up at lower wages but bends backward at higher wages as income effects outweigh substitution effects.
Backwardation
A futures-market situation in which futures prices are below the current spot price.
Bad Bank
A vehicle that purchases and works out non-performing or distressed assets so core banks can clean their balance sheets.
Bad Debt
Debt that is unlikely to be collected and must be recognized as a loss by the lender or seller.
Bad Debt Provision
An accounting charge that sets aside an allowance for expected losses on loans or receivables.
Bad Money Drives Out Good (Gresham’s Law)
When two forms of money circulate at a fixed rate, undervalued ‘good’ money is hoarded while overvalued ‘bad’ money remains in circulation.
Balance
A condition of equality or offsetting forces used in economics to describe stable relationships or positions.
Balance of Payments
The record of a country's transactions with the rest of the world over a period.
Balance of Trade
The difference between a country’s exports and imports of goods; a core part of the current account.
Balance Sheet
A statement showing assets, liabilities, and equity at a point in time.
Balance-of-Payments Crisis
A situation where a country cannot finance external payments sustainably, triggering reserve losses, currency pressure, or default risk.
Balanced Budget
A budget in which government revenue equals government expenditure over the chosen period.
Balanced Budget Amendment
A proposed constitutional rule requiring government expenditures not to exceed revenues within a fiscal year.
Balanced Budget Multiplier
In Keynesian models, equal increases in government spending and taxes raise output by exactly the spending increase.
Balanced Growth Path
A trajectory where key aggregates—output, capital, and often consumption—grow at the same constant rate, keeping ratios stable.
Balances with the Bank of England
Reserve balances UK commercial banks hold at the Bank of England to settle payments and meet liquidity needs.
Balancing Item
A statistical adjustment used when two theoretically equal aggregates do not match in measured data.
Baltic Free Trade Agreement
Baltic Free Trade Agreement - A free trade agreement between Estonia, Latvia, and Lithuania established in 1993 and remaining in place until the three countries joined the European Union in 2004.
Banco del Sur
A South American regional development bank initiative intended to fund projects and reduce reliance on traditional multilateral lenders.
Bandwidth (Nonparametric Estimation)
The smoothing window that controls how much neighboring data influence a nonparametric estimate.
Bank
A financial institution that takes deposits, extends credit, and provides payment and financial services.
Bank Account
An agreement with a bank to hold and manage funds, enabling deposits, withdrawals, and payments.
Bank Deposit
Money placed at a bank that becomes a bank liability and a depositor asset.
Bank for International Settlements
An international institution that supports central bank cooperation, monetary stability, and prudential standards.
Bank Loan
Credit extended by a bank to a household or firm under agreed repayment terms.
Bank Note
A paper currency claim issued under monetary authority and used as a medium of exchange.
Bank of England
The United Kingdom's central bank, responsible for monetary stability and key financial-system functions.
Bank Rate
The key interest rate set by a central bank as a benchmark for monetary conditions.
Bank Regulation
Public rules and oversight designed to limit risk-taking and protect the stability of the banking system.
Bank Run
A rush by depositors to withdraw funds because they fear a bank may not be able to repay them.
Banking
The business of taking deposits, extending credit, and providing payment and financial intermediation services.
Banking System
The network of banks, central-bank institutions, and supporting rules through which credit and payments are organized.
Bankruptcy
A legal process for dealing with debts that cannot be repaid in full.
Bargaining
A process in which parties negotiate over how to divide gains from exchange or cooperation.
Bargaining Power
The ability of a party in negotiation to secure a larger share of the gains from agreement.
Barriers to Entry
Obstacles that make it costly or difficult for new firms to enter a market.
Barriers to Exit
Obstacles that make it costly or difficult for firms to leave a market.
Barter
Direct exchange of goods or services without using money as the payment medium.
Barter Economy
An economy in which exchange takes place through direct trade rather than through money.
Base Erosion and Profit Shifting (BEPS)
Tax-planning strategies that reduce taxable profit in higher-tax countries and shift it elsewhere.
Base Money
The most liquid form of money, consisting mainly of currency in circulation and bank reserves.
Base Period
The reference period against which an index number is compared.
Base Rate
A benchmark interest rate used to price loans and influence borrowing conditions.
Base-Weighted Index
An index number that measures change using weights fixed in a chosen base period.
Basel Agreement
The original international agreement that set minimum capital standards for banks relative to the riskiness of their assets.
Basel II
The second Basel banking framework, built around minimum capital requirements, supervisory review, and market discipline.
Baseline
A baseline is the reference case used to compare actual outcomes, policy changes, or alternative scenarios.
Basic Rate
In UK taxation, the basic rate is the standard marginal income-tax rate applied to taxable income within the basic-rate band.
Basis Point
A basis point is one hundredth of a percentage point, used to describe small changes in rates, yields, and spreads.
Batch Production
Batch production means making goods in groups or runs rather than as a continuous flow or as one-off custom output.
Battle of the Sexes
A coordination game in which both players prefer coordinating to mismatching, but each prefers a different coordinated outcome.
Baumol's Law
Baumol's law says service sectors with slow productivity growth become relatively more expensive as economy-wide wages rise.
Bayes Theorem
Bayes theorem is the rule for updating probabilities after observing new evidence.
Bayesian Econometrics
Bayesian econometrics estimates economic models by combining prior beliefs with observed data to form posterior distributions.
Bayesian Inference
Bayesian inference updates probabilities or parameter beliefs by combining prior information with observed data.
BBB
BBB is a credit rating at the lower end of investment grade, indicating adequate capacity to meet obligations but meaningful exposure to adverse conditions.
Bear
A bear is an investor or market participant who expects prices to fall and positions accordingly.
Bear Market
A bear market is a broad, sustained decline in asset prices accompanied by pessimism, tighter financial conditions, or both.
Bearer Bond
A bearer bond is a bond owned by whoever physically holds the certificate rather than by a registered owner.
Before-Tax Income
Before-tax income is income received before direct taxes are deducted.
Beggar-My-Neighbour Policy
A beggar-my-neighbour policy tries to improve one country's economy by shifting demand, unemployment, or adjustment costs onto other countries.
Behavioural Economics
How psychological biases, limited attention, and reference-dependent preferences shape economic choices and outcomes.
Behavioural Equation
A behavioural equation is a structural equation that represents how households, firms, or other agents respond to incentives and constraints.
Behavioural Theories of the Firm
Behavioural theories of the firm explain firms as organizations with bounded rationality, routines, and multiple internal objectives rather than as single profit-maximizing calculators.
Below-the-Line
Below-the-line items are entries recorded outside the main operating or income result, often relating to financing, appropriation, or capital transactions.
Benefit Principle
The benefit principle says taxes or charges should, as far as possible, be paid by those who benefit from the public spending or service.
Benefits
Benefits are the gains in utility, willingness to pay, or welfare created by consuming a good, taking an action, or adopting a policy.
Benefits in Kind
Benefits in kind are goods or services provided directly rather than paid out as cash.
Benefits System
A benefits system is the set of public programs that provide income support or services when households face low income, unemployment, disability, or other need.
Benelux
Benelux is the economic union of Belgium, the Netherlands, and Luxembourg, often treated as an early example of regional economic integration.
Bergson-Samuelson Social Welfare Function
The Bergson-Samuelson social welfare function represents social welfare as a function of individual utilities, making value judgments explicit.
Bertrand Competition
Bertrand competition is a model in which firms compete by setting prices rather than quantities.
Best Linear Unbiased Estimator
A best linear unbiased estimator is a linear unbiased estimator with the smallest variance among all linear unbiased estimators.
Best-Fit Line
A best-fit line is the line that summarizes the average linear relationship between two variables in a scatterplot.
Beta Coefficient
The beta coefficient measures how strongly an asset's returns tend to move with the market as a whole.
Between-Groups Estimator
The between-groups estimator uses group averages in panel data to estimate how outcomes differ across entities rather than within each entity over time.
Beveridge Curve
The Beveridge curve plots unemployment against job vacancies and is used to study labor-market tightness and matching efficiency.
Beveridge Report
The Beveridge Report was the 1942 UK report that helped shape the postwar welfare state through proposals for social insurance and full-employment policy.
Bias of an Estimator
The bias of an estimator is the difference between its expected value and the true parameter it is trying to estimate.
Bid
A bid is an offer price made by a buyer in a market, auction, or takeover process.
Bid-Ask Spread
The bid-ask spread is the difference between the highest posted buying price and the lowest posted selling price for an asset.
Big Bang
In economics, a big bang is a strategy of rapid, comprehensive reform rather than gradual, step-by-step adjustment.
Big Mac Index
The Big Mac Index is an informal purchasing-power-parity comparison that uses the price of a Big Mac across countries to illustrate currency misalignment.
Big Push
The big push is a development-economics idea that poor countries may need coordinated large-scale investment across sectors to escape low-level traps.
Bilateral Monopoly
A bilateral monopoly is a market with one seller and one buyer, so price and quantity are determined by bargaining rather than by competitive market forces alone.
Bilateral Trade
Bilateral trade is trade conducted directly between two countries, often under a specific agreement or balancing arrangement.
Bill
In finance, a bill is a short-term debt instrument, usually sold at a discount and maturing in less than a year.
Bill of Exchange
A bill of exchange is a written order requiring payment of a specified sum at a specified time, commonly used in trade finance.
Billion
A billion means one thousand million in modern economic and financial usage.
Bimodal Distribution
A bimodal distribution has two distinct peaks, often showing that one dataset actually combines two different groups.
Binary Choice Models
Binary choice models estimate the probability of a yes-or-no outcome such as working, defaulting, or buying.
Binomial Distribution
The binomial distribution gives the probability of getting a fixed number of successes in a fixed number of independent trials.
Binomial Pricing
Binomial pricing values an option by letting the underlying asset move up or down step by step and ruling out arbitrage.
Biodiversity Index
A biodiversity index summarizes how many species are present and how evenly they are distributed in an ecosystem.
Biological Interest Rate
The biological interest rate is the return generated by population growth in simple overlapping-generations models.
Black Economy
The black economy consists of production, trade, and income that are hidden from the state to avoid tax, regulation, or legal detection.
Black Market
A black market is an illegal market in which goods or services are traded outside official rules, often at prices different from the legal price.