time lags

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The delay between an action and the event which is believed to have caused it. Time lags arise in several ways. First, there are lags in the collection, collation, and dissemination of economic data. Second, even when the data are available, economic decision-makers often defer action while they wait for more data, to try to assess whether changes are temporary or permanent, or because of disagreement about what the response should be. Third, even when decisions have been taken, it takes time to put them into effect: in some cases, for example opening a new factory in response to a rise in demand, this delay may be considerable.

Subjects: Economics.

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