Maturity

The term maturity (or the time horizon ) in economics summarizes various concepts of time periods. The consideration of concrete time intervals (months, quarters, years) or abstract time perspectives (period and period ) should make it possible to make more precise economic statements and to design models. The abstract subdivision that is made here differentiates between a short term , a medium term and a long term . However, the division into short and long term ( short run , long run ) is particularly important for economic modeling . ${\ displaystyle t}$ ${\ displaystyle t + 1}$

The separation of these intervals is fuzzy and not necessarily related to specific time periods. There are authors and scientists who, for example, assume a period from year to year for the short term, around 10 years for the medium term and 50 years for the long term. Mostly, however, the time reference is adapted to the various economic concepts.

Fixed costs are a classic example . This is a part of the total costs that remain constant over a certain period of time (e.g. a warehouse or a larger machine system). You cannot sell a warehouse in a very short period of time (overnight). However, it is plausible to assume that, if more time is available, this hall can be sold and the resulting costs can be saved. This is why one also speaks of the fact that there are no fixed costs at all if the observation period is long enough . The exact time it takes to sell a machine or warehouse is usually omitted. In fact, the period is only specified in retrospect, so to speak: however long it may take to sell a warehouse, this marks the transition to the long term.

Depending on the deadline, very different assumptions are made and models are designed with them. This can be about the behavior of individual actors (households, companies) or the events on individual markets (goods market, labor market) or in entire economies.

Due to their context-dependency and the inconsistency of various definitions, only a few examples from various specialist areas or models are presented below.

Short deadline

The short term can denote a period during which not all factors can fully adapt to a change.

In classic microeconomics , a short-term lower price limit is assumed (which is defined by the variable costs ). At this price level, it can happen that a company makes losses, but the turnover is sufficient to cover the variable costs.

In the short term, prices (or wages) are often assumed to be fixed or rigid. Catalogs, price lists and restaurant cards, which ensure fixed prices until the next edition or printing, often serve as examples.

Medium deadline

The macroeconomic equilibrium in the AS-AD model can be viewed in the short or medium term.

The longer the observation period, the more elastic the offer generally increases.

Long term

The period during which full adjustment to changes is possible.

In the neoclassical synthesis , prices and wages are assumed to be flexible in the long term.

In many economic theories it is assumed that an equilibrium will be established in all markets in the long term, since prices have enough time to adjust and thus ensure that supply and demand are brought into line (see Steady State ).

In the long-term equilibrium of the Solow model, it must be the case that the investments correspond exactly to the depreciation of the capital model.

The long term is generally the subject of a wide variety of growth theories .

Web links

Maturity - definition in the Gabler Wirtschaftslexikon
The short, the medium and the long term - article at Makroo.de

Individual evidence

↑ Cf. Blanchard, Olivier; Illing, Gerhard: Macroeconomics, 3rd, updated edition, Pearson Education Deutschland GmbH, Munich, 2003, page 836
^ William D. Nordhaus, Paul A. Samuelson: Economics: The international standard work of macro and microeconomics . mi business book; Edition: 3rd, updated edition (2007). P. 1043.
^ William D. Nordhaus, Paul A. Samuelson: Economics: The international standard work of macro and microeconomics . mi business book; Edition: 3rd, updated edition (2007). P. 1043.

[1] Cf. Blanchard, Olivier; Illing, Gerhard: Macroeconomics, 3rd, updated edition, Pearson Education Deutschland GmbH, Munich, 2003, page 836

[2] William D. Nordhaus, Paul A. Samuelson: Economics: The international standard work of macro and microeconomics . mi business book; Edition: 3rd, updated edition (2007). P. 1043.

[3] William D. Nordhaus, Paul A. Samuelson: Economics: The international standard work of macro and microeconomics . mi business book; Edition: 3rd, updated edition (2007). P. 1043.