# Long-lag theory (long-lag hypothesis)

- Canonical URL: https://www.gerhardmerk.de/long-lag-theory-long-lag-hypothesis
- Post ID: 593671
- Modified: 2023-07-25T21:02:50+00:00
- Language: en

## Definition

The view, discussed in economics, that central bank policies - have a very long impact lag - of up to two years, - therefore often end up achieving the opposite of what they want to achieve and - thus may exacerbate economic fluctuations. - Empirically, a short-lag assumption seems to be more likely to be confirmed for the euro area. According to this assumption, the impact lag is normally a maximum of six months; and it usually takes four to six quarters for a change in key interest rates to have its strongest effect on GDP. - See braking path, monetary, ElizabethQuestion, monetary policy, forward-looking, models, monetary, transmission mechanism, monetary, interest rate pass-through. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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