|M||In economic models involving international trade, M is usually chosen to represent imports, and X to represent exports, perhaps because I and E have too many other uses.|
|M1||The smallest of several measures of the stock of money in an economy, this consisting primarily of currency held by the public and demand deposits. Also includes several other very liquid items: travelers checks and other accounts on which checks can be written.|
|M2||A measure of the stock of money in an economy that includes, in addition to all that is in M1, savings deposits and other relatively liquid assets such as small certificates of deposit and money market mutual funds.|
|M&A||Mergers and Acquisitions|
|Maastricht Treaty||The 1991 treaty among members of the EU to work toward a monetary union, or common currency. This ultimately resulted in adoption of the euro in 1999.|
|Macroeconometric model||An econometric model of macroeconomic relationships, usually intended to capture the overall functioning of a national economy.|
|Macroeconomic||Referring to the variables or performance of an economy as a whole, or its major components, as opposed to that of individual industries, firms, or households.|
|Macroeconomic closure||The assumptions made in an economic model, especially in a CGE model to assure that it has a solution for all variables. A neoclassical closure has all markets clear and all agents satisfy budget constraints. For short-run policy purposes, some assume that certain markets (labor, foreign exchange) do not clear, or that government budgets are not balanced.|
|Macroeconomic policy||Any policy intended to influence the behavior of important macroeconomic variables, especially unemployment and inflation. Macroeconomic policies include monetary and fiscal policies, but also such things as price controls and incentives for economic growth.|
|Macroeconomic stabilization||See stabilization policy.|
|Made-to-measure tariff||A tariff set so as to raise the price of an imported good to the level of the domestic price, so as to leave domestic producers unaffected. Also called a scientific tariff.|
|Madrid Agreement||The Madrid Agreement Concerning the International Registration of Marks, signed in 1891, standardized the registration and protection of trademarks and service marks.|
|Maghreb||The region of West and Central North Africa comprised of Algeria, Libya, Mauritania, Morocco, Tunisia, and Western Sahara. Also spelled Maghrib.|
|Magnification effect||The property of the Heckscher-Ohlin Model that changes in certain exogenous variables lead to larger changes in the corresponding endogenous variables: goods prices as they affect factor prices in the Stolper-Samuelson Theorem; factor endowments as they affect outputs in the Rybczynski Theorem. Due to Jones (1965).|
|MAI||Multilateral Agreement on Investment|
|Main refinancing operations||The mechanism by which the European Central Bank provides the bulk of liquidity to the banking system.|
|Majority-owned foreign affiliate||A company in another country more than 50% of which is owned by a domestic person or company; thus one form of foreign direct investment.|
|Managed float||An exchange rate regime in which the rate is allowed to be determined in the exchange market without an announced par value as the goal of intervention, but the authorities do nonetheless intervene at their discretion to influence the rate.|
|Managed trade||The use of trade policies to manipulate trade for political purposes.|
|Mandated countertrade||A requirement by government that importing firms engage in countertrade, as a means of increasing exports.|
|Manufactured good||A good that is produced by manufacturing.|
|Manufacturing||Production of goods primarily by the application of labor and capital to raw materials and other intermediate inputs, in contrast to agriculture, mining, forestry, fishing, and services.|
|Manufacturing value added||Value added in the manufacturing sector of an economy; thus the income generated there for labor and other primary factors. Those who believe that manufacturing is somehow more important than other sectors of the economy regard a decline in this as cause for concern.|
|Maquiladora||A program for the temporary importation of goods into Mexico without duty, under the condition that they contribute -- through further processing, transformation, or repair -- to exports. The program was established in 1965, and expanded in 1989.|
1. The edge. In economics it usually refers to the last (in terms of quantity, not of time) unit consumed or produced by a consumer or firm.
2. A gap between one number and another, such as a dumping margin or injury margin.
|Margin of preference||
1. The extent to which one person or group is given more favorable treatment than others.
2. The percentage by which particular imports from one country are subject to lower tariffs than the MFN rate, as in a preferential trading arrangement.
|Marginal analysis||The determination of optimal behavior by comparing benefits and costs at the margin, that is, benefits and costs that result from small (i.e., marginal) changes. Optimality requires that marginal benefit equal marginal cost, since otherwise a rise or fall could increase benefit more than cost.|
|Marginal benefit||The increase in well being caused by an additional unit of some activity, such as the consumption of a good. Exactly whose well being this refers to depends on the context.|
|Marginal change||A small change in some quantity.|
|Marginal cost||The increase in cost that accompanies a unit increase in output; the partial derivative of the cost function with respect to output.|
|Marginal cost pricing||The outcome of perfectly competitive markets in which the price of each good is equal to its marginal cost.|
|Marginal intraindustry trade||The portion of a change in trade, usually from one year to the next, that is intraindustry trade. The term was introduced by Hamilton and Kniest (1991), who provided a measure of it. Other measures have appeared since.|
|Marginal product||In a production function, the marginal product of a factor is the increase in output due to a unit increase in the input of the factor; that is, the partial derivative of the production function with respect to the factor. In a competitive equilibrium, the equilibrium price of any factor is its marginal value product in every sector where it is employed.|
|Marginal profit||The amount by which a firm's profit rises or falls when output increases by one unit; thus marginal revenue minus marginal cost.|
|Marginal propensity||The fraction of a change in income devoted to an activity, such as consumption, importing, or saving. See propensity.|
|Marginal propensity to consume||The fraction of a change in income (or perhaps disposable income) spent on consumption. Contrasts with average propensity to consume.|
|Marginal propensity to import||The fraction of a change in income (or perhaps disposable income) spent on imports. Contrasts with average propensity to import.|
|Marginal propensity to save||The fraction of a change in income (or perhaps disposable income) that is saved.|
|Marginal rate of substitution||In a production function or a utility function, the ratio at which one argument (input) substitutes for another along an isoquant or indifference curve.|
|Marginal rate of technical substitution||More complete name for the marginal rate of substitution between factors in a production function, sometimes used to distinguish it from the analogous concept in a utility function.|
|Marginal rate of transformation||The increase in output of one good made possible by a one-unit decrease in the output of another, given the technology and factor endowments of a country; thus the absolute value of the slope of the transformation curve.|
1. Loosely, the extra that you get in return for doing more of something.
2. Marginal product
|Marginal revenue||The amount by which a firm's revenue increases when it expands output by one unit, taking into account that to sell one more unit it may need to reduce price on all units.|
|Marginal revenue product||The additional revenue generated by the extra output from employing one more unit of a factor of production. In a competitive industry this equals the marginal value product, but with imperfect competition it is smaller, due to the implied price reduction. Determines factor prices in competitive factor markets.|
|Marginal social benefit||The marginal benefit of an activity, such as consumption an additional unit of a good, where benefit here includes all positive effects on society as a whole, such as positive externalities, not just the benefit accruing to the consumer of the good. Negative externalities should also be deducted.|
|Marginal social cost||The marginal cost of an activity, such as producing an additional unit of a good, where cost here includes all negative effects on society as a whole, such as negative externalities, not just the cost borne by the producer of the good. Positive externalities should also be deducted.|
|Marginal tax rate||The amount that a taxpayer's total tax bill rises due to a one unit increase in the activity being taxed. Referring to an income tax, it is the tax on an additional dollar of income. Contrasts with average tax rate.|
|Marginal utility||In a utility function, the increase in utility associated with a one-unit increase in consumption of one good; or the partial derivative of the utility function.|
|Marginal value product||The value of the marginal product of a factor in an industry; that is, the price of the good produced times the marginal product. Determines factor prices when all markets are competitive.|
1. The belief that marginal analysis provides a useful theory of economic behavior.
2. The belief that economic value reflects marginal utility.
|Marine Mammal Protection Act||The 1972 U.S. law prohibiting the "taking" (harassing, hunting, capturing, or killing) of marine mammals, and also prohibiting the import of any marine mammal product or any fish that has been associated with the taking of marine mammals. See tuna-dolphin case.|
|Mark 2||Washington Consensus Mark 2 (or Mark II)|
|Mark of origin||A physical mark on a good, indicating its country of origin. Most countries require these on most imported goods. (But see J-List.)|
1. The interaction between supply and demand to determine the market price and corresponding quantity bought and sold.
2. The determination of economic allocations by decentralized, voluntary interactions among those who wish to buy and sell, responding to freely determined market prices.
|Market access||The ability of firms from one country to sell in another.|
|Market adjustment||The process by which the economy moves to a new market equilibrium when conditions change.|
|Market balance||Market equilibrium|
|Market capitalization||The stock-market value of a company, as measured by the number of publicly traded shares outstanding times their market price.|
|Market clearing||Equality of quantity supplied and quantity demanded. A market-clearing condition is an equation (or other representation) stating that supply equals demand. A market-clearing price is a price that causes quantities supplied and demanded to be equal.|
|Market disruption||The effect of an import surge, if large enough to cause serious injury and justify safeguard protection.|
|Market dynamics||The process by which market adjustment takes place. Common examples include Walrasian and Marshallian.|
|Market economy||A country in which most economic decisions are left up to individual consumers and firms interacting through markets. Contrasts with central planning and non-market economy.|
|Market equilibrium||Equality of quantity supplied and quantity demanded. See equilibrium.|
|Market failure||Any market imperfection, but especially the complete absence of a market due to incomplete or asymmetric information.|
|Market forces||The forces of demand and supply that cause prices to rise and to fall, as opposed, for example, to the actions of particular market participants or government which might otherwise be blamed for such changes.|
|Market imperfection||Any departure from the ideal benchmark of perfect competition, due to externalities, taxes, market power, etc. Same as distortion.|
|Market integration||Removal of barriers between two markets for the same product, so that prices on the two markets become more closely linked. Trade liberalization contributes to international market integration.|
|Market intervention||The act, usually by a government or central bank, of buying or selling in a market in order so as to influence the price. Most common is exchange market intervention, but governments also sometimes intervene in other markets, such as for agricultural products and primary commodities.|
|Market mechanism||The process by which a market solves a problem allocating resources, especially that of deciding how much of a good or service should be produced, but other such problems as well. The market mechanism is an alternative, for example, to having such decisions made by government.|
|Market potential||The capacity of a location, such as a country, to become or to grow as a demander of goods and services that outside suppliers might provide. Various measures of market potential are provided especially for emerging econommies, intended as guides to exports and foreign direct investment.|
1. Ability of a firm or other market participant to influence price by varying the amount that it chooses to buy or sell. Equivalently, ability to set price, as opposed to being a price taker.
2. Ability of a country to influence world prices by altering its trade policies.
1. The price at which a market clears.
2. Alternative to factor cost.
|Market rate||The interest rate or exchange rate at which a market clears.|
|Market reserve policy||See law of similars.|
|Market restriction||Any government-imposed or legal requirement that impedes the ability of suppliers and demanders to interact freely, such as limits on quantity or price. Restrictions are most common in labor markets and on foreign owned service providers.|
|Market segmentation||Segmented markets.|
|Market share||Usually refers to the fraction of sales in a national or international market for a product that is by a particular firm. However, the term is also sometimes used for the share for sellers from a particular country, as "the Japanese share of the US auto market."|
|Market structure||The way that suppliers and demanders in an industry interact to determine price and quantity. There are four main idealized market structures that have been used in trade theory: perfect competition, monopoly, oligopoly, and monopolistic competition.|
|Market value||See factor cost.|
|Marketing||The activities in which a firm engages intended to induce buyers to select its product. Models of perfect competition omit this activity, assuming that each firm can sell all it wishes at the prevailing price. Models of imperfect competition are more likely to include this, though in practice models of international trade seldom do.|
|Marketing board||A form of state trading enterprise, a marketing board typically buys up the domestic supply of a good and sells it on the international market.|
|Marking duty||An additional duty added to the price of an imported good if its country of origin is not properly marked, to cover the cost of marking it.|
1. The amount (percentage) by which price exceeds marginal cost. A profit-maximizing seller facing a price elasticity of demand η will set a markup equal to (p-c)/p=1/η. One effect of international trade that increases competition is to reduce markups.
2. In WTO terminology, sometimes used for the extent to which an applied tariff exceeds the bound rate.
|Marrakesh Ministerial||The final ministerial meeting of the GATT, in Marrakesh, Morroco, April 1994, at which the Uruguay Round was concluded and the World Trade Organization created, replacing the GATT.|
|Marrakesh Protocol||The agreement entered into by all signatories of the GATT at the April 1994 ministerial in Marrakesh, Morroco. This agreement adopted the Final Act of the Uruguay Round which, among other things, created the World Trade Organization.|
|Marshall-Lerner condition||The condition that the sum of the elasticities of demand for exports and imports exceed one (in absolute value); that is, ηX + ηM > 1, where ηX, ηM are the demand elasticities for a country's exports and imports respectively, both defined to be positive for downward sloping demands. Under certain assumptions, this is the condition for a depreciation to improve the trade balance, for the exchange market to be stable, and for international barter exchange to be stable.|
|Marshall Plan||A U.S. program to assist the economic recovery of certain European countries after World War II. Also called the European Recovery Program, it was initiated in 1947 and it dispersed over $12 billion before it was completed in 1952.|
|Marshallian adjustment||A market adjustment mechanism in which quantity rises when demand price exceeds supply price and falls when supply price exceeds demand price.|
1. This refers to the concepts of consumer surplus and producer surplus, as they were introduced by Alfred Marshall.
2. For consumer surplus, the Marshallian definition uses the demand curve holding income constant, in contrast to the Hicksian definitions, due to John Hicks, of compensating and equivalent variation.
|Marxist||Referring to the writings of Karl Marx and to a body of economic thought based, more or less loosely, on those writings.|
|Maskus curve||A graph of how intellectual property protection varies with per capita income, first falling as income rises, then rising. Due to Maskus and Penubarti (1995).|
|Material injury||The injury requirement of the AD and CVD statutes, understood to be less stringent than serious injury but otherwise apparently not precisely defined.|
|Maturity||The date at which a bond matures, that is, the date at which the issuer of the bond makes the final payment.|
|Maximum price system||Similar to a minimum price system, except that the price specified is the highest, rather than the lowest, permitted for an imported good.|
|Maximum revenue tariff||A tariff set to collect the largest possible revenue for the government.|
|MCC||Millennium Challenge Corporation|
|MDG||Millennium Development Goals|
|Meade Geometry||The geometric technique introduced by Meade (1952) of deriving a country's offer curve from its transformation curve and community indifference curves by first constructing a set of trade indifference curves.|
|Meade Index||Meade (1955a) used a measure of the gains from trade that has since been called the Meade Index. It can be expressed as I = Σi(ΔXi)ti + Σi(ΔMi)ti, where ΔXi and ΔMi are changes in exports and imports in sector i, each valued at the supply price in the exporting country, and ti is the ad valorem tariff on that trade.|
|Mean||The arithmetic average of the values of an economic or statistical variable. For a variable x with values xi, i=1, ,n, the mean is mean(x) = Σi=1 n(xi/n).|
|Measure of economic welfare||An aggregate figure that adjusts GDP in an attempt to measure a country's economic well-being rather than its production, with adjustments for leisure, environmental degradation, etc.|
1. In a sample of data, a value above which half the values lie and below which half the values lie.
2. In a probability distribution, a value above which there is 50% probability and below which there is 50% probability.
|Medium of exchange||Anything that is used, like money, to make payments for goods, services, and assets. For payments between countries with different currencies, if the national currencies are not trusted, another country's currency or gold may be used.|
|Medium-Term Expenditure Framework||An integrated approach to policy, planning, and budgeting by developing countries that estimates expenditures out three years from the present. It has been advocated by the World Bank and applied in a number of developing countries.|
|Melitz model||A heterogeneous firm model in which firms employ labor as their only input, firm productivity is chosen randomly, and firms die with some constant probability. With trade, only firms with productivity above some cutoff level are able to export. Due to Melitz (2003).|
|MENA||Middle East and North Africa. The acronym is used frequently by international organizations, but without a uniform definition of which countries are included.|
|Mercantilism||An economic philosophy of the 16th and 17th centuries that international commerce should primarily serve to increase a country's financial wealth, especially of gold and foreign currency. To that end, exports are viewed as desirable and imports as undesirable unless they lead to even greater exports.|
|Merchandise trade||Exports and imports of goods. Contrasts with trade in services.|
|Merchanting||The act by a resident of one country of buying a good in another country and reselling it in that or a third country, without the good ever entering the merchant's country of residence.|
|MERCOSUR||A common market orignally among Argentina, Brazil, Paraguay and Uruguay, known as the "Common Market of the South" ("Mercado Común del Sur"), created in 1991. In June 2012, Paraguay was suspended for undemocratically impeaching its president. In July, Venezuela was admitted as a full member.|
|Mergers and Acquisitions||The combination of what were previously two separate firms into one, either by their joining (merging) together as more or less equals or by one acquiring the other. These occur increasingly across national borders, thus constituting an important form of foreign direct investment.|
|METI||Ministry of Economy, Trade and Industry.|
|Metzler diagram||A diagram showing the joint determination of savings, investment, and the interest rate in two countries. Invented by Metzler (1960).|
|Metzler paradox||The possibility, identified by Metzler (1949), that a tariff may lower the domestic relative price of the imported good. This will happen if it drives the world price down by even more than the size of the tariff, as it may do if the foreign demand for the importing country's export good is inelastic.|
|MEW||Measure of economic welfare.|
|MFN||Most Favored Nation.|
|MFN rate||MFN tariff.|
|MFN status||The status given by the U.S. to some non-members of the GATT/WTO whereby they are charged MFN tariffs even though they are eligible for higher tariffs. See PNTR.|
|MFN tariff||The tariff level that a member of the GATT/WTO charges on a good to other members.|
|MIC||Middle Income Country|
|Microeconomic||Referring to the behavior of and interactions among individual economic agents, especially firms and consumers, and especially in markets. Contrasts with macroeconomic.|
|Microfinance||Refers to institutions that specialize in making very small loans to very poor persons in developing countries. Instead of using collateral to assure repayment, these lenders harness social pressure within the borrower's community. Originally done on a nonprofit basis, it is now being done increasingly by for-profit companies.|
|Middle Income Country||The middle income group in the World Bank's classification of countries by GNI per capita, calculated by the Atlas Method. Based on July 2010 data, these were countries with incomes between $1,006 and $12,275. The group is also split into Lower-Middle and Upper-Middle, below and above $3975 respectively. Other groups are Low Income Countries and High Income Countries.|
|Middle product||A good that has undergone some processing and that requires further processing before going to final consumers; an intermediate good. Sanyal and Jones (1982) introduced the term, observing that almost all international trade is of middle products, and they provided a model based on that assumption.|
|MIGA||Multilateral Investment Guarantee Agency|
|Migration||The permanent relocation of people from one country to another. See emigration, immigration.|
|MIIT||Marginal intraindustry trade|
|Millennium Challenge Corporation||"An innovative and independent U.S. foreign aid agency that is helping lead the fight against global poverty." It provides aid to the world's poorest countries in the form of partnerships, but only to countries that meet certain eligibility criteria with regard to "good governance, economic freedom, and investments in their citizens."|
|Millennium Development Goals||A set of objectives for economic development agreed upon at a September 2000 meeting of world leaders at the United Nations, and intended to be achieved by the year 2015.|
|Millennium Round||The name suggested by the European Union for the trade round that they and others hoped would be initiated at the Seattle Ministerial in 1999. That ministerial ended without agreement to start a new round.|
|Mill's test||One of two conditions needed for infant industry protection to be welfare-improving, this requires that the protected industry become, over time, able to compete internationally without protection. See also Bastable's test.|
|Minimum efficient scale||The smallest output of a firm consistent with minimum average cost. In small countries, in some industries the level of demand in autarky is not sufficient to support minimum efficient scale.|
|Minimum import price||See minimum price system.|
|Minimum price system||Specification of the lowest price permitted for an import. Prices below the minimum may trigger a tariff, hence a variable levy, or quota. See maximum price system. These have several names: basic import price, minimum import price, reference price, and trigger price.|
|Minimum valuation||A customs valuation procedure that sets a minimum value for an imported good, regardless of its transaction value and thus, with an ad valorem tariff, sets a higher duty than it otherwise would.|
|Minister of International Trade||Title, in many but not all countries, of the trade minister.|
|Ministerial||A meeting of ministers. In the context of the GATT and WTO, it is a meeting of the trade ministers from the member countries (including, from the U.S., USTR).|
|Ministerial Declaration||The outcome of a successful ministerial: a document that the ministers have agreed upon.|
|Ministry of Economy, Trade and Industry||The Japanese government ministry that deals with economic issues, including the vitality of the private sector, external economic relations, energy policy, and industrial development.|
|Ministry of International Trade and Industry||The Japanese government ministry that deals with trade and industrial policies. Established in 1949 as the Ministry of Commerce and Industry, MITI was renamed METI as of January 6, 2000.|
|Mirror statistics||The approach of inferring a country's trade data, or checking their accuracy, by using the trade data of the countries with which it trades.|
1. The sum of the rates of unemployment and inflation. Originated by Arthur Okun as advisor to President Lyndon Johnson.
2. The Barro Misery Index due to Barro (1999) which adds the increase in the long-term interest rate and the shortfall of GDP from potential.
|Missing trade||See mystery of the missing trade.|
|MITI||Ministry of International Trade and Industry|
|Mixed credit||A form of trade financing that provides an element of aid, through a low interest rate or long credit period, and therefore is partially an export subsidy.|
|Mixed economy||An economy in which some production is done by the private sector and some by the state, in state-owned enterprises.|
|Mixed tariff||Compound tariff|
1. Specification of the proportion of domestically produced content in products sold on the domestic market.
2. Specification of an amount of domestically produced product that must be bought by an importer for given quantities of imports, under a linking scheme.
|Mixing requirement||Mixing regulation|
|Mobility||See labor mobility.|
|Modality||Method or procedure. WTO documents speak of modalities of negotiations, i.e., the outlines (formulas or other approaches) of how the negotiations are to be conducted. Getting agreement on modalities is often extremely difficult.|
|Mode of supply||The method by which suppliers of internationally traded services deliver their service to buyers. The four modes usually identified are: Mode 1: cross-border supply, Mode 2: consumer movement, Mode 3: producer presence, and Mode 4: movement of natural persons.|
|Modes 1 to 4||See Mode of supply|
|Model||A stylized simplification of reality in which behavior is represented by variables and by assumptions about how they are determined and interact. Models enable one to think consistently and logically about complex issues, to work out how changes in an economic system matter, and (sometimes) to make predictions about economic performance.|
|Moderation||See Great Moderation.|
|MOFA||Majority-owned foreign affiliate|
|Monetary aggregate||Any of several definitions of a country's money supply.|
|Monetary approach||A framework for analyzing exchange rates and the balance of payments that focuses on supply and demand for money in different countries. A floating exchange rate is assumed to equate supply and demand and thus to reflect relative growth rates of money supplies and determinants of demand. Under a pegged exchange rate, the balance of payments surplus or deficit equals the excess demand or supply, respectively, for a country's money.|
|Monetary base||Usually, the currency and central bank deposits that together provide the base for the money supply under fractional reserve banking. Also defined as the central bank assets the acquisition of which creates this monetary base by injecting domestic money into the economy. The latter definition usually includes international reserves and domestic credit. By either definition, the monetary base changes as a result of open market operations and exchange market intervention.|
|Monetary contraction||Contractionary monetary policy.|
|Monetary easing||Expansionary monetary policy|
|Monetary expansion||Expansionary monetary policy; thus printing money or otherwise increasing the money supply.|
|Monetary independence||The ability of a country to determine its own monetary policy, as opposed to allowing the money supply to be determined by the exchange market intervention required to maintain a fixed exchange rate.|
|Monetary integration||The adoption of a common currency by two or more countries.|
|Monetary neutrality||The principle that the quantity of money should not affect real variables in the long run.|
|Monetary overhang||Money overhang|
|Monetary policy||The use of the money supply and/or the interest rate to influence the level of macroeconomic activity and other policy objectives including the balance of payments or the exchange rate.|
|Monetary stimulus||Expansionary monetary policy. So called because, by lowering interest rates, it stimulates investment and thus aggregate demand.|
|Monetary tightening||Contractionary monetary policy|
|Monetary transmission mechanism||
1. Any of several channels by which a change in the money supply of a country can cause changes in real variables. Most operate primarily within a country, but some, as through the exchange rate, operate through international transactions.
2. Any of several ways that real and monetary shocks in one economy can be transmitted to another through monetary channels involving interest rates, exchange rates, and international capital flows.
|Monetary union||Two or more countries sharing a common currency.|
1. To turn anything into money.
2. To convert government debt into currency.
|Monetize debt||To pay off government debt by printing money.|
1. Anything that serves the three basic purposes of money: medium of exchange; store of value; unit of account.
2. In modern economies, a currency issued by an agency of government.
3. As an adjective, "money" refers to the value of something denominated in the prevailing currency and not corrected for inflation; contrasts with real.
|Money GDP||Nominal GDP; contrasts with real GDP.|
|Money income||Nominal income; contrasts with real income.|
|Money laundering||The conversion of large amounts of money the source of which one wants to hide (e.g., from drug trafficking) into a form that appears to be legitimate. The process often involves multiple international transactions across currencies and financial institutions in order to obscure the source.|
|Money market||The money market, in macroeconomics and international finance, refers to the equilibration of demand for a country's domestic money to its money supply. Both refer to the quantity of money that people in the country hold (a stock), not to the quantity that people both in and out of the country choose to acquire during a period in the exchange market, mostly for the purpose of then using it to buy something else.|
|Money multiplier||When a central bank engages in open market operations to change the monetary base, the money multiplier is the ratio of the resulting change in the money supply to the change in the base. If banks and others keep the base at a fraction, ρ, of the money supply (e.g., if only banks hold currency, with a fixed reserve ratio, ρ), then the money multiplier is 1/ρ.|
|Money neutrality||Monetary neutrality|
|Money overhang||A money supply that is larger than people want to hold at prevailing prices, perhaps because of shortages or rationing of goods in the past. This was said to be a major cause of inflation in Russia after the fall of the Soviet Union, which left an excess of money in circulation.|
|Money price||The nominal price; thus the price as it would actually be observed, in current dollars. Contrasts with the real price, which is adjusted for inflation.|
|Money supply||There are several formal definitions, such as M1 and M2, but all include the quantity of currency in circulation plus the amount of demand deposits. The money supply, together with the amount of real economic activity in a country, is an important determinant of its price level and its exchange rate.|
|Monopolistic||Having some power to set price.|
|Monopolistic competition||A market structure in which there are many sellers each producing a differentiated product. Each can set its own price and quantity, but is too small for that to matter for prices and quantities of other producers in the industry.|
|Monopoly||A market structure in which there is a single seller.|
|Monopoly argument||The monopoly argument for a tariff is the same as the optimal tariff argument. It gets its name from the fact that a country using a tariff to improve the terms of trade is acting much like a monopoly firm, restricting its sales to get a better price.|
|Monopoly price||The profit-maximizing price charged by a monopolist. Because a monopoly faces a demand elasticity, η>0, that is finite, this price -- whose markup over marginal cost (P−MC)/P=1/η -- exceeds marginal cost.|
|Monopsony||A market structure in which there is a single buyer. Term introduced in Robinson (1932).|
|Monotonic||Changing in one direction only; thus either strictly rising or strictly falling, but not reversing direction.|
|Montreal Protocol||The Montreal Protocol on Substances that Deplete the Ozone Layer, signed in 1987, limited trade in products containing CFCs. It was the first major agreement to restrict trade for environmental purposes.|
|Moral hazard||The tendency of individuals, firms, and governments, once insured against some contingency, to behave so as to make that contingency more likely. A pervasive problem in the insurance industry, it also arises internationally when international financial institutions assist countries in financial trouble.|
|Moral rights||In terms of IP , these are the rights of an author or other creative person over how their creation is used, modified, etc. after the economic rights have been transferred to somebody else by copyright. Moral rights are not uniform across IP jurisdictions and are not regulated by the WTO's TRIPS Agreement.|
|Mortgage||A loan the collateral for which is a house or other real estate. I would not have thought this term needed to appear in a glossary of international economics, until 2008 when we learned that mortgage-backed securities had been traded internationally and were contributing to the global financial crisis when borrowers defaulted.|
|Mortgage-backed security||A financial instrument that packages the ownership of shares in a large number of mortgages.|
|Most Favored Nation||The principle, fundamental to the GATT, of treating imports from a country on the same basis as that given to the most favored other nation. That is, and with some exceptions, every country gets the lowest tariff that any country gets, and reductions in tariffs to one country are provided also to others.|
|Mothballing||The preservation of a production facility without using it to produce, but keeping the machinery in working order and supplies available. This may be preferable -- if the facility's operating costs are high and the aim is to have it available in time of war -- to having it produce in peacetime under a subsidy or import protection. See national defense argument.|
|Movement of natural persons||Mode 4 of four modes of supply under the GATS, this involving the temporary movement across national borders of natural persons employed by or associated with a firm in order to participate in the firm's business. Also called temporary producer movement.|
|MPC||Marginal propensity to consume.|
|MRO||Main refinancing operations.|
|MRS||Marginal rate of substitution.|
|MRT||Marginal rate of transformation.|
|MRTS||Marginal rate of technical substitution.|
|MTEF||Medium-Term Expenditure Framework.|
|MTN||Multilateral trade negotiation.|
|MTO||Multilateral Trade Organization.|
|Multi-cone equilibrium||A free-trade equilibrium in the Heckscher-Ohlin Model in which prices are such that all goods cannot be produced within a single country, and instead there are multiple diversification cones. This, or a two cone equilibrium, will arise if countries' factor endowments are sufficiently dissimilar compared to factor intensities of industries. Contrasts with one cone equilibrium.|
|Multi-level governance||A theoretical perspective on the organization of modern states that acknowledges flexible structures of overlapping jurisdictions, both above and below the national government as well as in a lateral relationship to it.|
|Multifactor model||A model with more than two factors. In the context of trade theory this is likely to mean a Heckscher-Ohlin Model with more than two factors.|
|Multifiber Arrangement||An agreement (OMA) among developed country importers and developing country exporters of textiles and apparel to regulate and restrict the quantities traded. It was negotiated in 1973 under GATT auspices as a temporary exception to the rules that would otherwise apply, and was superseded in 1995 by the ATC.|
|Multifunctionality||Refers to the purposes that an industry may serve in addition to producing its output. Most often applied to agriculture by countries that wish to subsidize it, arguing that subsidies are needed to serve these other purposes, such as rural viability, land conservation, cultural heritage, etc.|
|Multigood model||A model with more than two goods.|
|Multilateral||Among a large number of countries, usually including all countries that are members of a large international organization, such as the WTO. Contrasts with bilateral and plurilateral.|
|Multilateral agreement||An agreement among a large number of countries.|
|Multilateral Agreement on Investment||An agreement to liberalize rules on international direct investment, negotiated in the OECD but never completed or adopted because of adverse public reaction. Preliminary text of the agreement was leaked to the Internet in April 1997, where many groups opposed it. Negotiations discontinued in November 1998.|
|Multilateral aid||Aid provided by a group of countries, or an institution representing a group of countries such as the World Bank, to one or more recipient countries. Contrasts with unilateral aid.|
|Multilateral Investment Guarantee Agency||One of the five institutions that comprise the World Bank Group, MIGA helps encourage foreign investment in developing countries.|
|Multilateral resistance||A term introduced into the gravity equation by Anderson and van Wincoop (2003) to account for overall distance and other trade impediments to a country's total trade. It must be considered, relative to bilateral resistance to trade with any single country, in estimating the determinants of trade with that country.|
|Multilateral trade liberalization||Reduction of tariffs and/or nontariff barriers by one or (usually) more countries on imports from all countries (or all members of the WTO). This is most likely to happen as a result of multilateral trade negotiations, such as the various GATT and WTO Rounds.|
|Multilateral trade negotiation||A trade negotiation involving a large number of countries, usually all of the signatories of the GATT or members of the WTO in the form of a GATT or WTO trade round.|
|Multilateral Trade Organization||The proposed name, during the Uruguay Round negotiations, for what ultimately became the World Trade Organization.|
|Multilateralism||The approach to trade policy and trade negotiations favoring agreements among all (or most) countries of the world at once, rather than only one or a small number at a time in separate bilateral, regional, or plurilateral agreements.|
|Multinational corporation||A corporation that operates in two or more countries. Since it is headquartered in only one country but has production or marketing facilities in others, it is the result of previous FDI.|
|Multinational enterprise||A firm, usually a corporation, that operates in two or more countries. In practice the term is used interchangeably with multinational corporation.|
|Multiple equilibria||Refers to a system in which there is more than one equilibrium, most commonly a market in which a backward bending supply curve crosses a demand curve more than once, at prices each of which is a market clearing price.|
|Multiple exchange rates||The existence of more than one exchange rate for a given pair of currencies. Rare today, this used to be common in countries with extensive capital controls, which also set different exchange rates for different purposes.|
|Multiplier||In Keynesian macroeconomic models, the ratio of the change in an endogenous variable to the change in an exogenous variable. Usually means the multiplier for government spending on income. In the simplest Keynesian model of a closed economy, this is 1/s, where s is the marginal propensity to save. See open economy multiplier.|
|Multistage production||Another term for fragmentation. Used by Dixit and Grossman (1982).|
|Mundell-Fleming Model||An open-economy version of the IS-LM model that allows for international trade and international capital flows. Due to Mundell (1962,63) and Fleming (1962).|
1. The specific factors model diagram, as attributed to Mussa (1974).
2. A diagram for explicating properties of the 2-factor Heckscher-Ohlin Model introduced by Mussa (1979). With factor prices on its axes, zero-profit curves for each sector show the determination of factor prices more directly than the Lerner Diagram, which serves much the same purposes.
|Mutatis mutandis||Latin phrase meaning, approximately, "allowing other things to change accordingly." Used as a shorthand for indicating the effect of one economic variable on another, within a system in which other variables that matter will also change as a result. Contrasts with ceteris paribus.|
|Mutual recognition||The acceptance by one country of another country's certification that a satisfactory standard has been met for ability, performance, safety, etc.|
|Mystery of the missing trade||The empirical observation, by Trefler (1995), that the amount of trade is far less than predicted by the HOV version of the Heckscher-Ohlin Model. More precisely, the factor content of trade is far less than the differences between countries in their factor endowments.|