| K | In economic models, K is commonly used to represent "capital." This is presumably due to the fact that German for capital is kapital, and also the fact the C is more commonly used to represent consumption. |
| Kaldor-Hicks Criterion | The criterion that, for a change in policy or policy regime to be viewed as beneficial, the gainers should be able to compensate the losers and still be better off. The criterion does not require that the compensation actually be paid, which, if it did, would make this the same as the Pareto criterion. Due to Kaldor (1939), Hicks (1940). |
| Kaldor-Hicks improvement | Potential Pareto improvement |
| Kaldor improvement | Potential Pareto improvement |
| Kaleidoscope comparative advantage | A variant of fragmentation due to Bhagwati and Dehejia (1994). |
| Keiretsu | A group, or network, of manufacturing and other companies in Japan, usually centered around a bank and including a trading company. Keiretsus are characterized by cross-ownership of shares, strategic coordination, and preference for transactions within the network. |
| Kemp-Wan Theorem | The proposition, due to Kemp and Wan (1976), that any group of countries can form a customs union that is Pareto-improving for the world, so long as nondistorting lump-sum transfers within the union are possible. This is accomplished by setting the vector of common external tariffs so as to leave world prices unchanged. |
| Kennedy Round | The sixth round of multilateral trade negotiations that was held under GATT auspices, commencing 1964 and completed 1967. It was the first to move beyond negotiating only tariff reductions into such trade rules as anti-dumping. |
| Keynesian | Referring to models of the aggregate economy based on ideas stemming from Keynes (1936). Keynesian models depart from neoclassical assumptions primarily by allowing for disequilibrium in labor markets, with aggregate employment and output being determined instead by aggregate demand. |
| Knowledge capital | The knowledge-based assets that a firm acquires -- through R&D or by licensing technology from others, for example -- that it is then able to use for its activities throughout the firm, including in multiple production facilities. |
| Knowledge capital model | A model of a multinational enterprise in which knowledge capital plays an essential role. Named and estimated by Carr et al. (2001), who attribute it to earlier work by Markusen and others. |
| Knowledge economy | This term refers loosely to modern advanced economies in which knowledge -- both human capital and advanced technology -- is thought to be more important than other factors, such as capital and natural resources, for economic success. |
| Kondratieff cycle | A cycle in economic activity hypothesized by Kondratieff (1926) to operate over a period of several decades and divided into four phases: spring (expansion), summer (recession), autumn (plateau), and winter (depression). Also called the Kondratieff wave or long wave. |
| Kuznets Curve | An inverse U-shaped relationship between per capita income and inequality, suggesting that inequality is low in very poor countries, rises as they develop, and then ultimately falls as income rises still further. Hypothesized by Kuznets (1955). |