lagged relationship

lagged relationship

the relationship between two or more VARIABLES in different time periods. For example, the current value of a variable like consumption expenditure will depend upon income in the previous time period. Time is denoted by the letter t, with t - t being one period back and t + I being one period forward. Such a relationship between income and consumption can be written in the notational form:

where Ct = consumption in present period, Yt - 1 = income in the previous period. See also LEADS AND LAGS, COBWEB THEOREM.

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