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Hard Landing

What is 'Hard Landing'

An economic state wherein the economy is slowing down sharply or is tipped into outright recession after a period of rapid growth, due to government attempts to rein in inflation. A hard landing may be the undesirable consequence of efforts by a nation's central bank to tighten monetary policy, so as to slow down growth and keep inflation in check. While a soft landing is generally the objective of such tightening measures, a hard landing may be the occasional - and unfortunate - result.

Explaining 'Hard Landing'

For example, China's rapid economic growth in recent years has often given rise to speculation about the possibility of a hard landing, in which the economy slows down from a double-digit rate to a growth pace in the low single digits. This could occur if measures by the Chinese government to tighten monetary policy slow down growth faster than it expects, or would like.


In the United States, a hard landing is the occasional outcome of the Federal Reserve's tightening cycle, during which the federal funds rate is steadily ratcheted higher over a period of many months.


Further Reading


The J-curve, the fire sale, and the hard landing
www.jstor.org [PDF]
… The basic outlines of a hard landing are easy to envision: a sharp fall in the value of the US dollar, a rapid … Source: Bureau of Economic Analysis … Obviously, the scale of the financial flows needed to finance any given current account deficit would fall if net FDI outflows stopped, or …

Global imbalances and financial stabilityGlobal imbalances and financial stability
www.sciencedirect.com [PDF]
… The basic outlines of a hard landing are easy to envision: a sharp fall in the value of the US dollar, a rapid … Source: Bureau of Economic Analysis … Obviously, the scale of the financial flows needed to finance any given current account deficit would fall if net FDI outflows stopped, or …

Global spillovers of a China hard landingGlobal spillovers of a China hard landing
papers.ssrn.com [PDF]
… The basic outlines of a hard landing are easy to envision: a sharp fall in the value of the US dollar, a rapid … Source: Bureau of Economic Analysis … Obviously, the scale of the financial flows needed to finance any given current account deficit would fall if net FDI outflows stopped, or …

A hard landing for the 'New Economy'? Information technology and the United States national system of innovationA hard landing for the 'New Economy'? Information technology and the United States national system of innovation
www.sciencedirect.com [PDF]
… The basic outlines of a hard landing are easy to envision: a sharp fall in the value of the US dollar, a rapid … Source: Bureau of Economic Analysis … Obviously, the scale of the financial flows needed to finance any given current account deficit would fall if net FDI outflows stopped, or …

External contradictions of the Chinese Development Model: export-led growth and the dangers of global economic contractionExternal contradictions of the Chinese Development Model: export-led growth and the dangers of global economic contraction
www.tandfonline.com [PDF]
… The basic outlines of a hard landing are easy to envision: a sharp fall in the value of the US dollar, a rapid … Source: Bureau of Economic Analysis … Obviously, the scale of the financial flows needed to finance any given current account deficit would fall if net FDI outflows stopped, or …

End of the expansion: Soft landing, hard landing, or even crash?End of the expansion: Soft landing, hard landing, or even crash?
www.tandfonline.com [PDF]
… The basic outlines of a hard landing are easy to envision: a sharp fall in the value of the US dollar, a rapid … Source: Bureau of Economic Analysis … Obviously, the scale of the financial flows needed to finance any given current account deficit would fall if net FDI outflows stopped, or …

China's economic hard landing impact on Africa: A scenario analysisChina's economic hard landing impact on Africa: A scenario analysis
scholar.sun.ac.za [PDF]
… The basic outlines of a hard landing are easy to envision: a sharp fall in the value of the US dollar, a rapid … Source: Bureau of Economic Analysis … Obviously, the scale of the financial flows needed to finance any given current account deficit would fall if net FDI outflows stopped, or …

Financial crisis 2008: Entering global recessionFinancial crisis 2008: Entering global recession
www.tandfonline.com [PDF]
… The basic outlines of a hard landing are easy to envision: a sharp fall in the value of the US dollar, a rapid … Source: Bureau of Economic Analysis … Obviously, the scale of the financial flows needed to finance any given current account deficit would fall if net FDI outflows stopped, or …



Q&A About Hard Landing


What is the definition of a hard landing?

A hard landing is an economic state wherein the economy is slowing down sharply or tipped into outright recession after a period of rapid growth.

Can you give an example of when China had a hard landing?

Yes, in 2008 when China's economy slowed from double-digit rates to low single digits due to tighter monetary policy.

How does a hard landing differ from a soft landing?

A soft landing is when the economy's growth rate slows enough to control inflation, but remains high enough to avoid recession.

Who may cause a hard landing?

The government may cause a hard landing.

How can you tell if there has been a hard landing?

You can tell by looking at the country's GDP growth rate, which slows down sharply or tips into outright recession.

What are the criteria for distinguishing between a soft and hard landings?

The criteria for distinguishing between a soft and hard landings are numerous and subjective.

What does central bank do to try and avoid this situation?

Central banks try to avoid this situation by tightening monetary policy.

Why might some countries be more susceptible than others during times of high inflation and tight monetary policy?

Some countries may be more susceptible than others because they have less flexible exchange rate policies or fixed exchange rate systems that make it difficult for them to adjust quickly as needed during periods of high inflation and tight monetary policy adjustments by their central bank . This makes it harder for these nations' economies to respond appropriately during times of high inflation and tight monetary policy adjustments by their

Where do modern recessions and hard and soft landings follow from in the United States of America?

Modern recessions and hard and soft landings follow from Federal Reserve tightening cycles, in which the Federal funds rate is increased over several consecutive moves.

Can you give an example of when the United States had a hard landing?

Yes, in 1929 when the Federal Reserve ratcheted up interest rates during its tightening cycle and caused America's Great Depression.

Is it possible for every country to have a soft landing every time they tighten their monetary policy?

No, not all countries will have soft landings each time they attempt to slow down inflation with higher interest rates because some countries are more susceptible than others based on their current economic conditions and policies that are already in place.

What is a hard landing?

A hard landing is an economy that rapidly shifts from growth to slow-growth to flat as it approaches a recession.

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