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Leakage

What is a 'Leakage'

Leakage is a situation in which capital, or income, exits an economy or system rather than remaining within it. In economics, leakage refers to outflow from a circular flow of income model. In a two-sector model exhibiting a circular flow, all individual income is sent back to employers when goods and services are purchased, and back to employees through wages and dividends, creating a system without leakage.

Explaining 'Leakage'

The exit of money from the economy through leakage results in a gap in supply and demand. Leakage occurs when income is taken out through taxes, savings and imports. In retail, leakage refers to consumers who spend money outside of the local market.

Sources of Leakage

Income can leak out of closed systems through a variety of events and mechanisms. Tourism can cause leakage through funds transitioning between those who live in a particular area and chosen tourist destinations. Additionally, tourism-based businesses who have facilities in one area, but hold their headquarters in another, may create leakage as funds are shifted to the headquarters location.

Compensation for Leakage

In Keynesian economics, governments may have to inject cash into the system if leakage causes a shortage of capital. This injection of funds can occur by increasing the level of exports to foreign nations as well as through borrowing funds from investors or foreign governments.

Information Leakage

In regards to information or data, leakage occurs when internal information that was intended to remain private or confidential in nature is released to the public. This can include the accidental or intentional disclosure of information, or the failure to secure the information allowing for incidental exposure.


Further Reading


The “Leaking” Effect in Transmission of China's Monetary Policy [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-JJYJ200308002.htm'>PDF]
… latest 5 years, and suggests that there appears a phenomenon of monetary “leakage” when “positive … the paper gives some countermeasures concerning how to hold in the “leaking”effect … Mechanism of Monetary Policy: Debate and Thoughts[J];Finance and Economics;2005-02 …

Policy update: Managing carbon leakagePolicy update: Managing carbon leakage
www.tandfonline.com [PDF]
… latest 5 years, and suggests that there appears a phenomenon of monetary “leakage” when “positive … the paper gives some countermeasures concerning how to hold in the “leaking”effect … Mechanism of Monetary Policy: Debate and Thoughts[J];Finance and Economics;2005-02 …

A border adjustment for the EU ETS: Reconciling WTO rules and capacity to tackle carbon leakageA border adjustment for the EU ETS: Reconciling WTO rules and capacity to tackle carbon leakage
www.tandfonline.com [PDF]
… latest 5 years, and suggests that there appears a phenomenon of monetary “leakage” when “positive … the paper gives some countermeasures concerning how to hold in the “leaking”effect … Mechanism of Monetary Policy: Debate and Thoughts[J];Finance and Economics;2005-02 …

Components of carbon leakage in the fuel market due to biofuel policiesComponents of carbon leakage in the fuel market due to biofuel policies
www.tandfonline.com [PDF]
… latest 5 years, and suggests that there appears a phenomenon of monetary “leakage” when “positive … the paper gives some countermeasures concerning how to hold in the “leaking”effect … Mechanism of Monetary Policy: Debate and Thoughts[J];Finance and Economics;2005-02 …

Economic analysis of leakage in the Bangkok water distribution systemEconomic analysis of leakage in the Bangkok water distribution system
ascelibrary.org [PDF]
… latest 5 years, and suggests that there appears a phenomenon of monetary “leakage” when “positive … the paper gives some countermeasures concerning how to hold in the “leaking”effect … Mechanism of Monetary Policy: Debate and Thoughts[J];Finance and Economics;2005-02 …

Information leakage and market efficiencyInformation leakage and market efficiency
academic.oup.com [PDF]
… latest 5 years, and suggests that there appears a phenomenon of monetary “leakage” when “positive … the paper gives some countermeasures concerning how to hold in the “leaking”effect … Mechanism of Monetary Policy: Debate and Thoughts[J];Finance and Economics;2005-02 …

Financial Leakage, Bank Discrimination and Trade CreditsFinancial Leakage, Bank Discrimination and Trade Credits
en.cnki.com.cn [PDF]
… latest 5 years, and suggests that there appears a phenomenon of monetary “leakage” when “positive … the paper gives some countermeasures concerning how to hold in the “leaking”effect … Mechanism of Monetary Policy: Debate and Thoughts[J];Finance and Economics;2005-02 …

Competitiveness and leakageCompetitiveness and leakage
ideas.repec.org [PDF]
… latest 5 years, and suggests that there appears a phenomenon of monetary “leakage” when “positive … the paper gives some countermeasures concerning how to hold in the “leaking”effect … Mechanism of Monetary Policy: Debate and Thoughts[J];Finance and Economics;2005-02 …

The Theory and Empirical Analysis of Special Transfer Payments Leakage <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-CJYJ200712007.htm' />The Theory and Empirical Analysis of Special Transfer Payments Leakage [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-CJYJ200712007.htm'>PDF]
… latest 5 years, and suggests that there appears a phenomenon of monetary “leakage” when “positive … the paper gives some countermeasures concerning how to hold in the “leaking”effect … Mechanism of Monetary Policy: Debate and Thoughts[J];Finance and Economics;2005-02 …

Identifying carbon leakage sectors in the EU ETS and implications of resultsIdentifying carbon leakage sectors in the EU ETS and implications of results
www.tandfonline.com [PDF]
… latest 5 years, and suggests that there appears a phenomenon of monetary “leakage” when “positive … the paper gives some countermeasures concerning how to hold in the “leaking”effect … Mechanism of Monetary Policy: Debate and Thoughts[J];Finance and Economics;2005-02 …



Q&A About Leakage


What causes data leaks ?

Data leaks can happen when internal information that was intended to remain private or confidential becomes exposed publicly either accidentally or intentionally .

What are the different types of leakage?

There are several types of leakage including tourism and information.

How does retail leakage occur?

Retail leakage occurs when there is unsatisfied demand within the trading area and that the locality should provide extra stores spaces for such type of businesses.

What is retail leakage?

Retail leakage occurs when local people spend a larger amount of money on goods than local businesses report in sales, usually due to people traveling to a neighboring town to buy goods.

Why does retail leakage occur?

After all, retail leakage does not necessarily translate into opportunity. For instance, there could be a tough competition in a nearby locality that leads the market for same type of product. Many small - to medium-sized communities experience leakage of retail expenditures as local citizens drive to neighboring towns to shop at national retail chains (e.g., Tesco, Asda) or eat at national restaurant chains (e.g., Slug and Lettuce, Harvester). Attracting such national retail chain stores and restaurants to a community can prevent this type of expenditure leakage and create local jobs.

How do businesses create leakage?

Businesses may create leakage by having facilities in one area but holding their headquarters in another location. This creates a shift of funds from one location to another.

What is leakage?

Leakage is a situation in which capital, or income, exits an economy or system rather than remaining within it.

Who might have access to this leaked data ?

Anyone with access to this data could potentially see it , whether they were supposed to see it or not .

Is there any way you can prevent your data from being leaked ?

Yes , you should make sure that all your devices are password protected so no one else has access without permission .

What are some examples of negative Retail Trade Gaps or Surplus factors?

The economic definition of leakage is situation in which an income exits an economy instead of staying within. In retail, leakage refers to consumers spending money outside the local market. For instance, crossing a border to buy goods instead of making the same purchase from local shops. Alternatively a retail surplus means that the ""

Why might governments need to inject cash into the system if there is too much leakage?

If there is too much money leaking out of the system then government may need to inject cash into the system to keep it running smoothly. This injection could be done by increasing exports or borrowing from investors or foreign governments.

How does tourism cause leakage?

Tourism causes leakage through funds transitioning between those who live in a particular area and chosen tourist destinations.

Where can leakage occur?

Leakage can occur in various areas including tourism and information.

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