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Macroeconomic Factor

Macroeconomic Factor

What is a 'Macroeconomic Factor'

A macroeconomic factor is a factor that is pertinent to a broad economy at the regional or national level and affects a large population rather than a few select individuals. Macroeconomic factors such as economic output, unemployment, inflation, savings and investment are key indicators of economic performance and are closely monitored by governments, businesses and consumers.

Explaining 'Macroeconomic Factor'

The interplay or relationship between various macroeconomic factors is the subject of a great deal of study in the field of macroeconomics. While macroeconomics deals with the economy as a whole, microeconomics is concerned with the study of individual agents, such as consumers and businesses and their economic decision-making.

Negative Macroeconomic Factors

Negative macroeconomic factors include events that may put a national or international economy in jeopardy. General feelings of political instability, including a nation’s involvement in either civil or international wars, will experience economic shifts. This can be due to the reallocation of resources common in war-time economies, as well as any damage to property, assets and livelihoods as a result of the turmoil.

Neutral Macroeconomic Factors

Certain economic shifts are neither positive nor negative by design. Instead, the exact implications are determined by the intent of the action. This can include issues that aim to regulate trade across state or national borders. The nature of the change, such as enacting or rescinding a trade embargo, will have a variety of affects depending on which economy is being examined.

Positive Macroeconomic Factors

Positive macroeconomic factors generally include events that lead to prosperity within a nation or multiple nations. For example, a decrease in fuel prices within the United States may drive consumers to purchase more retail goods and services. As the demand for goods and services increases, suppliers of those items, both nationally and internationally, will see increased revenue from the heightened consumer activity. In turn, these increased profits may see stock prices rise.

Macroeconomic Factor Cycle

Often, economies are cyclic at the macroeconomic level. As positive influences lead to prosperity, this may raise certain prices due to increased demand. This may then suppress the economy as households become more restrictive of their spending. As supply begins to outweigh demand, prices may again dip, leading to additional prosperity until the next shift in economic supply and demand.


Further Reading

Should macroeconomic forecasters use daily financial data and how?Should macroeconomic forecasters use daily financial data and how?
www.tandfonline.com [PDF]
… prone to specification errors as a full system of equations and latent factors are required … In particular, using a dynamic factor state-space model and the Kalman filter, one … Potentially, MIDAS regressions with leads in macroeconomic data can also address the ragged character of …

Cross-border acquisitions of US financial institutions: Impact of macroeconomic factorsCross-border acquisitions of US financial institutions: Impact of macroeconomic factors
www.sciencedirect.com [PDF]
… prone to specification errors as a full system of equations and latent factors are required … In particular, using a dynamic factor state-space model and the Kalman filter, one … Potentially, MIDAS regressions with leads in macroeconomic data can also address the ragged character of …

Financial intermediation and macroeconomic analysisFinancial intermediation and macroeconomic analysis
www.aeaweb.org [PDF]
… prone to specification errors as a full system of equations and latent factors are required … In particular, using a dynamic factor state-space model and the Kalman filter, one … Potentially, MIDAS regressions with leads in macroeconomic data can also address the ragged character of …

Macroeconomic effects of financial shocksMacroeconomic effects of financial shocks
www.aeaweb.org [PDF]
… prone to specification errors as a full system of equations and latent factors are required … In particular, using a dynamic factor state-space model and the Kalman filter, one … Potentially, MIDAS regressions with leads in macroeconomic data can also address the ragged character of …

Japan's financial crisis and economic stagnationJapan's financial crisis and economic stagnation
www.aeaweb.org [PDF]
… prone to specification errors as a full system of equations and latent factors are required … In particular, using a dynamic factor state-space model and the Kalman filter, one … Potentially, MIDAS regressions with leads in macroeconomic data can also address the ragged character of …

The arbitrage pricing theory, macroeconomic and financial factors, and expectations generating processesThe arbitrage pricing theory, macroeconomic and financial factors, and expectations generating processes
www.sciencedirect.com [PDF]
… prone to specification errors as a full system of equations and latent factors are required … In particular, using a dynamic factor state-space model and the Kalman filter, one … Potentially, MIDAS regressions with leads in macroeconomic data can also address the ragged character of …

Financial innovations and macroeconomic volatilityFinancial innovations and macroeconomic volatility
www.nber.org [PDF]
… prone to specification errors as a full system of equations and latent factors are required … In particular, using a dynamic factor state-space model and the Kalman filter, one … Potentially, MIDAS regressions with leads in macroeconomic data can also address the ragged character of …

Macroeconomic determinantsof workers' remittances: Hostversus home country's economic conditionsMacroeconomic determinantsof workers' remittances: Hostversus home country's economic conditions
www.tandfonline.com [PDF]
… prone to specification errors as a full system of equations and latent factors are required … In particular, using a dynamic factor state-space model and the Kalman filter, one … Potentially, MIDAS regressions with leads in macroeconomic data can also address the ragged character of …


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