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accounting rules. The effect of the single
Eurozone interest rate on the relatively high-inflation countries in the Eurozone periphery is also pro-cyclical, leading to very low or even negative real interest rates during an upturn which magnifies the boom (e.g. 'Celtic Tiger' upturn in Ireland) and
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is an example of a countercyclical variable. Similarly, business failures and stock market prices tend to be countercyclical. In finance, an asset that tends to do well while the economy as a whole is doing poorly is referred to as countercyclical, and could be for example a business or a financial
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Procyclical has a different meaning in the context of economic policy. In this context, it refers to any aspect of economic policy that could magnify economic or financial fluctuations. Of course, since the effects of particular policies are often uncertain or disputed, a policy will be often
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fiscal policy as a better method for maintaining an overall robust economy. When the government adopts a countercyclical fiscal policy in response to a threat of recession the government might increase infrastructure spending.
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The concept is often encountered in the context of a government's approach to spending and taxation. A 'procyclical fiscal policy' can be summarised simply as governments choosing to increase
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tendencies in the economy. That is, countercyclical policies are ones that cool down the economy when it is in an upswing, and stimulate the economy when it is in a downturn.
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is said to be countercyclical. That is, quantities that tend to increase when the overall economy is slowing down are classified as 'countercyclical'.
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Gordy, Michael B.; Howells, Bradley (2006). "Procyclicality in Basel II: Can we treat the disease without killing the patient?".
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Alesina, Alberto; Campante, Filipe R.; Tabellini, Guido (2008). "Why is Fiscal Policy Often
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