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:GLOSSARY OF TERMS
Printable Format
Acronym
De nition
Term
A tax that is calculated according to the market value of
the tax base and usually expressed as a percentage of the
.tax base
Ad valorem tax
An increase in the value of the domestic currency due to a
shift in market conditions, as a result of which more units
of foreign currency are required to obtain one unit of
domestic currency (or, vice-versa, one unit of the
domestic currency purchases more units of foreign
currency). In case of nominal appreciation, the nominal
exchange rate, de ned as the amount of foreign curency
needed to obtain one unit of domestic currency,
.increases
Appreciation,
nominal
An increase in the real exchange rate, due to changes in
domestic prices, foreign prices, or the nominal exchange
rate. As a result of a real appreciation, the price of
domestic goods increases relative to the price of foreign
.goods, once both are expressed in the same currency
Appreciation, real
A pre-announced rule of international price pass-through
that allows frequent and transparent changes in domestic
.energy prices
Automatic pricing
mechanism
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Acronym
KAB
De nition
Term
A statement that summarizes the transactions between
the residents of an economy and nonresidents during a
speci c period, usually a year. Transactions recorded in
the BOP include the exchange of goods, provision of
services and factor of production, donations and
transfers, exchange of assets, incurrence and exstinction
.of liabilities. The BOP is recorded on a accrual basis
Balance of payments
The reference price used to calculate the level of subsidy.
Where an energy product is internationally traded, the
benchmark price for calculating subsidies is based on the
international price. Where the product is mostly nontraded (such as electricity), the appropriate benchmark
price is the cost-recovery price for the domestic producer,
.including distribution costs
Benchmark price of
energy
.See Net lending/borrowing
Budget de cit
The capital account in the international accounts shows
(a) capital transfers receivable and payable between
residents and nonresidents and (b) the acquisition and
disposal of nonproduced, non nancial assets between
.residents and nonresidents
Capital Account
The balance on the capital account, that is capital account
.credit entries minus capital account debit entries
Capital account
balance
Purchases of land, intangible assets, government stocks,
and nonmilitary equipment that will be used for more
than one year. Capital expenditures are sometimes
.recorded in a separate capital account
Capital expenditures
((government
Net cash in ow from operating activities minus the net
cash ow from investments in non nancial assets. It is
essentially the cash equivalent concept of net
.lending/borrowing
Cash surplus/de cit
The provision of assistance in the form of cash to the
poor or to those who face a probable risk of falling into
.poverty in the absence of the subsidy
Cash transfers
Central and Eastern Europe and Commonwealth of
.Independent States
CEE-CIS
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Acronym
C
De nition
Term
All government departments, o ces, and other bodies
that function as agents of a country's central authority,
including departmental enterprises and social security
funds operating at the national level. The operations of
the central government include all activities nanced
.through the budget and extrabudgetary accounts
Central government
Total remuneration, in cash and in kind, payable to
government employees in return for work done during
the accounting period, except for work connected with
own-account capital formation. Includes both wages and
salaries and social contributions made on behalf on
.employees to social insurance schemes
Compensation of
employees
The ability of an agent or country to produce or sell
.compared to others
Competitiveness
A measure of the general level of prices based on the cost
.of a typical basket of consumer goods and services
Consumer price
(index (CPI
The di erence between the retail price and a benchmark
.price
Consumer subsidy
The decline, during the accounting period, in the current
value of producers' xed assets as a result of normal
obsolescence, physical deterioration, or accidental
damage. The consumption of xed capital di ers from
depreciation in business accounting primarily because the
assumptions governing the valuation of assets, taxation,
.and in ation accounting di er
Consumption of
xed capital
The use of goods and services by individuals, households,
.and communities to satisfy individual or collective needs
Consumption, nal
Government nal consumption expenditure.
Expenditures incurred by the government for the nal use
of goods and services and the collective use of services.
Because the consumption of government services cannot
be allocated among those who bene t from them, it is
.attributed to the government
Consumption,
government
Household nal consumption expenditure. Expenditures
incurred by resident households for goods and services,
including imputed expenditures (own-account
.(consumption
Consumption,
household
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Acronym
De nition
Term
.See Consumption, Household
Consumption,
private
.See Consumption, Government
Consumption, public
Contracts that create a conditional nancial claim on a
unit, meaning that the claim only becomes e ective if a
stipulated condition or conditions arise. By conferring
rights or obligations that may a ect future decisions,
contingent contracts produce an economic impact on the
parties involved, and should therefore be recorded as a
.memo item in the government balance sheet
Contingent contracts
((assets or liabilities
This is often measured by headline in ation, excluding
food and energy in ation. The reason is that, in practice,
food and energy prices are volatile and are therefore less
indicative of medium-term in ation pressures than are
the price changes of other goods and services
Core (Underlying)
In ation
.The relationship between changes in two variables
Correlation
Cost, insurance, and freight, or charged in full. The
charges for delivering a good to the place where it will be
consumed. Sometimes imports are measured on the
.(.basis of these costs (see also F.O.B
Cost Insurance and
(.Freight (C.I.F
A price at which the pro ts of an enterprise or rm are
.exactely equal to zero
Cost-recovery price
A descriptive statistic that provides a measure of how
.much two random variables change together
Covariance
Cross-sectional data, or a cross section of a study
population, in statistics and econometrics is a type of onedimensional data set. Cross-sectional data refers to data
collected by observing many subjects (such as individuals,
rms or countries/regions) at the same point of time, or
without regard to di erences in time. Analysis of crosssectional data usually consists of comparing the
.di erences among the subjects
Cross-Sectional Data
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Acronym
De nition
Term
The process whereby increased government sector
borrowing reduces private sector spending, especially
investment expenditure. Generally this occurs when an
increased de cit is nanced by issuing bonds, leading to
higher interest rates, which price some private borrowers
.out of the nancial market
Crowding out
Spending on wages and salaries, goods and services,
interest payments on the public debt, transfers, and
.subsidies
Current expenditures
((government
.A tax on certain items purchased abroad
Custom duty
Financial claims that require payment(s) of interest and/or
principal by the debtor to the creditor at a date in the
.future
Debt
Interest and amortization on debt. In the BOP, the
interest due is recorded in the current account as a debit
entry, under primary income, while amortization is
.recorded as a debit entry in the nancial account
Debt service
Debt is a type of liability that requires the payment of
.principal and/or interest at some point(s) in the future
Debt, external
The ratio of a country's gross public debt to its gross
domestic product
Debt-to-GDP Ratio
The utility for a good or service of an economic agent,
.relative to a budget constraint
Demand
A decrease in the value of the domestic currency due to a
shift in market conditions, as a result of which fewer units
of foreign currency are required to obtain one unit of
domestic currency (or, vice-versa, one unit of the
domestic currency purchases less units of foreign
currency). In case of nominal depreciation, the nominal
exchange rate, de ned as the amount of foreign curency
needed to obtain one unit of domestic currency,
.decreases
Depreciation,
nominal
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Glossary | ESRx | edX
Acronym
De nition
Term
A decrease in the real exchange rate, due to changes in
domestic prices, foreign prices, or the nominal exchange
rate. As a result of a real depreciation, the price of
domestic goods decreases relative to the price of foreign
.goods, once both are expressed in the same currency
Depreciation, real
.Developing Asia
Dev. Asia
Government expenditure that may be changed from year
.to year at the discretion of policy-makers
Discretionary
expenditure
The amount of tax revenue actually collected divided by
the actual tax base or by the proxy tax base.The amount
of tax revenue actually collected divided by the actual tax
base or by the proxy tax base.The amount of tax revenue
actually collected divided by the actual tax base or by the
.proxy tax base
E ective tax rate
E cient taxation requires that all consumption, including
that of energy products, be subject to this taxation. It
energy further requires corrective taxes to capture
negative environmental and other externalities due to
.(energy use (such as global warming and local pollution
E cient taxation
Corrective taxes to capture negative environmental and
other externalities due to energy use (such as global
.(warming and local pollution
E cient taxation (of
(energy
The ratio of the percentage change of a dependent
variable to the percentage change of an independent
variable. For example, the price elasticity of the supply of
exports is the percentage change in exports that results
.from a 1 percent increase in the (relative) price of exports
Elasticity
.The exchange rate observed on the last day of a period
Exchange rate, endof-period
The simple average of observed exchange rates during a
given period (for example, the average for all business
.(days during a month
Exchange rate,
period average
An inland tax on the sale of speci c goods or a tax on a
good produced for sale, or sold, within a country or
licenses for speci c activities. Excises are distinguished
.from customs duties, which are taxes on importation
(Excise (excise tax
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Acronym
De nition
Term
E
A decrease in net worth resulting from a transaction. The
major categories of expenses are: compensation of
employees, use of goods and services, consumption of
xed capital, interest, subsidies, grants, social bene ts,
.and other expenses
Expense
X
Goods and services produced in the domestic economy
and sold to the rest of the world. Exports include both
physical goods, and services. Exports are valued at the
market price at the time of the transaction and are
.recorded f.o.b
Exports
All nonresidents who engage in economic transactions
.with the residents of an economy
External sector
The cost or bene t that a ects a party who did not
choose to incur that cost or bene t. Negative
externalities: e.g., manufacturing activities that cause air
pollution impose health and clean-up costs on the whole
.society
Externalities
The means by which a government obtains funds to cover
a budget de cit. Financing includes all transactions
involving government liabilities (bonds, treasury bills) and
assets (deposits and other nancial assets) with other
domestic sectors of the economy and the rest of the
.world
Financing
((government
Set of statistics that summarizes the activities and
nancial condition of the public sector, both at a point in
.(time (stocks) and over a period of time ( ows
Fiscal Accounts
An indicator summarizing some aspect of public sector
performance and nancial/or situation. Generally refers
to ow indicators, such as the Net Operating Balance, the
.Overall Balance, or Net Lending/Borrowing
Fiscal balance
The ability of a government to continue its current
spending, tax and other policies in the long run without
threatening government solvency--by exhausting
government net worth--or defaulting on a portion of its
.liabilities or expenses
Fiscal sustainability
.Predicting the path of economic variables into the future
Forecasting
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Acronym
De nition
Term
Borrowing from foreign governments, international
organizations, banks and suppliers. Net borrowing is
.borrowing minus amortization
Foreign borrowing
((government
A means of valuing goods that includes the costs of
manufacturing, loading, and shipping to a national border
but not the costs of transporting the goods beyond the
border. In the BOP, imports and exports are generally
.(.valued f.o.b. (see also C.I.F
Free on board
(.(F.O.B
Gross Domestic Product of the current year valued at the
prices of a base year. This measure re ects the changes in
.volume from one period to another
GDP (in constant
(prices
GDP
Gross Domestic Product of the current year valued at this
year's prices. This measure re ects the changes in prices
.and volume from one period to another
GDP (in current
(prices
PGDP
An implicit or explicit price index of total domestic
production. It re ects the changes in prices from one
period to another. When combined with GDP in constant
.prices it yields GDP in current prices
GDP de ator
All government units operating in a country; is comprised
of the central government; state (or provincial or
regional), and local governments, including municipalities
and school boards. Social security funds are part of the
general government, but non nancial public enterprises
and public nancial institutions are not, as they are
.classi ed as public corporations
General government
sector
the market value of all nal goods and services produced
within a country in a given period. The GDP is determined
using data for production, expenditures, or income and is
.presented in current or constant prices
Gross domestic
(product (GDP
A measure of the total in ation within an economy,
including commodities such as food and energy prices,
which tend to be much more volatile and prone to
.in ationary spikes
Headline In ation
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Acronym
M
De nition
Term
In statistics, a histogram is a graphical representation of
the distribution of data. It is an estimate of the probability
distribution of a continuous variable and was rst
introduced by Karl Pearson.[1] A histogram is a
representation of tabulated frequencies, shown as
adjacent rectangles, erected over discrete intervals (bins),
with an area proportional to the frequency of the
observations in the interval. The height of a rectangle is
also equal to the frequency density of the interval, i.e., the
frequency divided by the width of the interval. The total
.area of the histogram is equal to the number of data
Histogram
The consuming population of an economy. They buy
goods and services in the market for products, and sell
labor, land and capital on various factor markets.
Households make decisions about how much to spend on
consumer goods and services, and how much to save,
and how to allocate their savings as holdings of
alternative nancial and real assets (cash on hand, bank
(.savings deposits, bonds, home ownership, and so forth
Households
Goods and services that the domestic economy
purchases from the rest of the world. Includes physical
goods and services. Imports are valued at the market
price at the time of the transaction. They are generally
.recorded f.o.b
Imports
Money received in the form of income and transfers that
can be used for nal consumption expenditures and
.savings
Income, disposable
The change in the international prices of energy are not
fully re ected in the change of the domestic prices of
.energy
Incomplete passthrough
A sustained increase in the general price level. The rate of
in ation is the percentage change in the price level in a
.(given period (usually one year
In ation
A sustained increase in the general price level. The rate of
in ation is the percentage change in the price level in a
.(given period (usually one year
In ation
The rate of in ation is the percentage change in the price
.(level in a given period (usually one year
In ation Rate
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Acronym
De nition
Term
The annual return on a xed-priced nancial asset
.expressed as a percentage of the price of the asset
Interest rate
The price of a good on the ""world market,"" or the price
outside of any country's borders and therefore exclusive
.of any trade taxes or subsidies
International price
.Latin America and Caribbean
LAC
Government units for which the legislative, judicial and
executive authority is restricted to the smallest
geographic areas distinguished for administrative and
.political purposes
Local government
A state where supply and demand are balanced; generally
.de ned as a combination of a price and a quantity
Market equilibrium
.Middle East and North Africa
MENA
A good that is not traded, either because it cannot be or
.because trade barriers are too high
Non-tradable good
All resident non nancial corporations controlled by
.general government units
Non nancial public
corporations
Changes in the volume of assets and liabilities other than
from transactions. They arise from exceptional o
unexpected events (for example, natural disasters or
wars), normal events (such as the discovery of a subsoil
asset or the registration of a patent), or reclassi cations
.((such as a restructuring of public sector entities
Other volume
changes
Goods and services produced by enterprises and made
available to other enterprises and consumers. Output is
calculated as the sum of total sales and net changes in
inventories. Several di erent types of output can be
distinguished: (i) products that are sold; (ii) products that
are bartered; (iii) products that are destined for ownaccount uses; and (iv) products that are added to
.inventories
Output
The di erence between the level of actual output and
potential output, usually expressed as a percentage of the
level of potential output: Output gap=(Actual outputPotential output)/Potential output *100
Output gap
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Acronym
De nition
Term
The sum of the current and capital account balances and
net errors and omissions, minus the nancial account
balance. If the overall balance is positive, the BOP is in
surplus - that is, receipts in respect of all transactions
covered exceed payments, and foreign reserves increase.
If the balance is negative, the BOP is in de cit, and foreign
.reserves fall
Overall balance
Net lending/borrowing adjusted through the
rearrangement of transactions in assets and liabilities
that are deemed to be for public policy purposes. In
particular, all proceeds under privatization (including
xed asset sales) would be deducted (treated as nancial
items) as well as subsidies given in the form of loans
.((treated as expense
Overall balance
The ratio of the change (absolute) international prices of
energy over the change (absolute) of domestic prices of
.energy
Pass-through (enegy
(price
Markets such that no participants are large enough to
have the market power to set the price of a homogeneous
.product
Perfect competition
A tax applied to a market activity that is generating
. negative externalities
Pigouvian tax
The level of output that can be produced if all of the
.""factors of production are employed at its ""natural rate
Potential output
Exists if the retail price is below supply and distribution
.costs
Pre-tax subsidy
Total noninterest revenue minus total noninterest
expense and net acquisition of non nancial assets. Also
equal to Net lending/borrowing plus net interest expense
.minus net interest revenue
Primary de cit or
surplus
The ratio of output to inputs in production; it is an
.average measure of the e ciency of production
Productivity
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Acronym
De nition
Term
All resident corporations controlled by general
government units. They often are dedicated to productive
activities that operate much like private enterprises,
although maximizing pro ts may not be their main
objective. They hire input factors such as labor, land, and
capital to produce goods and services, and in some cases,
they compete directly with private rms. Examples of
public corporations are the national rail company, the
national airline, the public electric utility, and the public
water supply company. Also included in this de nition are
publicly owned nancial institutions (in particular, the
central bank), which are classi ed as nancial public
.corporations
Public corporations
The public sector includes both general government and
.the public corporations
Public sector
Activities conducted by private or public entities aimed at
discovering solutions to problems or creating new goods
and knowledge, which may result in ownership of
.intellectual property such as patents
R&D (Research and
(Development
RGDP
Gross Domestic Product of the current year valued at the
prices of a base year. This measure re ects the changes in
volume from one period to another. See also GDP (in
.(constant prices
Real GDP
r
The annual return, corrected for in ation, on a nancial
asset (such as a bond), expressed as a percentage of the
.price of the asset
Real interest rate
Real economic transactions of an economy
Real sector
All nonresident units that enter into transactions with
residents or have claims on residents (see also External
(Sector
Rest of the world
sector
The total price charged for a product sold to a customer,
which includes the manufacturer's cost plus a retail
.markup
Retail price
An increase in net worth resulting from a transaction. The
main categories of revenues are: taxes, social
.contributions, grants, and other revenue
Revenue
((government
R
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Acronym
De nition
Term
.Sub-Saharan Africa
S. S. Africa
S
Disposable income that is not spent on the consumption
.of goods or services
Savings
Sg
Income the general government does not use for
consumption. Government savings are calculated either
as total government income and grants minus
government nal consumption or as the di erence
between government revenue and grants minus current
.expenditures
Savings, government
Illegal transportation of goods across an international
.border in violation of applicable laws or other regulations
Smuggling
Payments given by the government to households and
individuals to provide relief for the burden of social risks,
which are events or circumstances that may adversely
household welfare either by imposing additional
demands on their resources or by reducing their incomes.
.Social bene ts may be paid in cash or in kind
Social bene ts
A tax based on the real quantity of a good (for example,
on the tonnage of wheat imported) rather than its
.monetary value
Speci c tax
Government units for which the legislative, judicial and
executive authority extends over a state, province, or
.region, but does not extend into another
State government
Current payments made by the government to
enterprises. Subsidies are distributed on the basis of
production levels, quotas, or the value of the goods or
services produced, sold, or imported. Subsidies are not
.payable to nal consumers. See also Transfers
Subsidies
The amount of a product that producers and rms are
willing to sell at a given price all other factors being held
.constant
Supply
A compulsory contribution exacted by the government to
pay for public goods. The major categories are taxes on
income, pro ts and capital gains; on payroll and
workforce; on property; on goods and services; on
.international trade and transactions; and other taxes
Tax
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Acronym
De nition
Term
An economic event (income earned or the sale of goods)
or condition (ownership of a house or other asset) that, as
.de ned by law, generates a tax liability
Tax base
The amount of tax due divided by the value of the tax
.base
Tax rate
A good that is traded internationally, or could be traded
internationally given a plausible variation in relative
.prices
Tradable good
A transaction is an interaction between two economic
agents that occurs by mutual agreement or through the
operation of the law and involves an exchange of value or
.a transfer
Transaction
A measure that calculates the value of output, less the
value of intermediate consumption. Gross value added is
.used to measure production and is equivalent to GDP
Value added, gross
A tax on goods and services levied at di erent stages of
production. The tax is calculated not on the value of
.output but on the value added at that stage
Value-added tax
(.(V.A.T
A measure for variation of a variable over time (generally
captured through the statistical variance or standard
(deviation
Volatility
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