Economicae^©

an illustrated encyclopedia of economics

Famous Economists

Mathematics of Economics

January effect:	The January effect refers to the tendency for the stock market to rise between the last day of December and the first few days of January. Many investors sell stocks on which they have lost before the end of December, the last day of a tax year, so that their losses are recognized for tax purposes. They then use the proceeds to buy stock in early January because they want to keep their funds actively invested. The resulting tendency for stock prices to decline as the year ends and to increase at the beginning of the year is the January effect, which is also known as the year-end effect.
jawboning:	See moral suasion.
J-curve:	Devaluation or depreciation of a currency resulting from persistent balance of trade deficits may actually increase the country’s trade deficit in the short run because, in the short run, foreign demands for the country’s exports may be relatively price inelastic, and its citizens’ demands for imports may also be price inelastic. (Such short run declines in the total value of exports and increases in the domestic value of imports are sometimes referred to as exchange rate damnification.) In the longer run, however, the demands for both imports and exports tend to be price elastic. The consequence of these elasticities can sometimes cause a countries balance of trade to trace a “J” path, termed the J-curve.
Jevons, William Stanley:	William Stanly Jevons [1835-1882] was an English economist and skilled mathematician who was among the pioneers in applying marginal analysis to economics. He is widely credited with being “the minister who united demand and supply” as an explanation for prices, and was instrumental in compelling other English economists to abandon the labor theory of value. He also forcefully pointed out the irrelevance for rational decisionmaking of historical costs (also known as fixed costs or sunk costs).
job leavers:	Job leavers are those persons who are currently unemployed but who voluntarily quit their previous jobs.
job lock:	Job lock occurs when a worker feels hindered in leave a current job because of certain fringe benefits (e.g., pensions or health insurance) that hinge on aspects of (e.g., seniority in) their current job but not immediately available or never available from a different employer.
job losers:	Job losers are those persons currently unemployed because they have been laid off or fired.
joint product:	Two or more goods are joint products when the production of one good automatically increases production of the other goods. Examples include bacon, lard, pork, and pig leather, or lumber and tons of bark mulch. The prices of joint products do not necessarily move synchronously. For example, an increase in the demand for beef will increase the price of beef while reducing the price of cowhide, but an increase in the supply of beef will reduce the prices of both beef and cowhide. John Stuart Mill established in the 1860s that if beef ranchers merely break even [zero economic profit], then the sum of the prices of beef and leather will equal the cost of producing both simultaneously.
joint profit maximization:	Joint profit maximization is the goal when a cartel of oligopolistic firms tries to share the profits that a monopoly would make if it controlled the industry.
joint supply:	See joint product.
joint venture:	A joint venture entails a time-limited partnership between individuals, firms, or governmental organizations that is formed for a specific purpose (e.g., producing or marketing a good, or developing a new technology).
jollies:	“Jollies” is a synonym for utils, which are imaginary cardinal measures of the enjoyment an individual receives from consuming a good.
Juglar cycle:	The Juglar cycle is the label Joseph Schumpeter applied to the intermediate business cycle that Schumpeter hypothesized depends on relatively minor innovations, such as radar or electronic calculators, and runs its course in 8 to 11 years.
junk bonds:	Junk bonds are risky bonds with low credit ratings. These very speculative assets must usually yield relatively high expected rates of return to compensate financial investors for the perception that the risk of default is high.
jurisdiction shopping:	Jurisdiction shopping occurs when firms locate specific operations in areas with the most favorable political and economic regulations, such as an area’s tax and environmental policies. For example, many major corporations are headquartered in Delaware because Delaware’s laws tend to favor corporate executives vis-à-vis such other parties as shareholders, employees, or customers. Jurisdiction shopping also occurs when lawyers try to have trials take place in jurisdictions known to support the positions of their clients, as when juries in certain states or counties seem, on average, hostile to insurance companies and sympathetic to people who have suffered injuries.
jurisdictional strikes:	Jurisdictional strikes occur when one union strikes because of a dispute with another union about which union will represent a group of workers. Such strikes were outlawed by the Taft-Hartley Act of 1947.
just price:	A just price is one at which neither buyers nor sellers take advantage of the other party in a transaction, according to the medieval Catholic scholars Albertus Magnus [born between 1193 and 1206AD; died 1280] and Thomas Aquinas [1225-1274]. This normative notion can be traced back to Aristotle, who recognized the existence of gains from trade and argued that such gains should be roughly evenly divided between the transacting parties. Some modern economic thinkers argue that the price yielded by a purely competitive market conforms to the definition of a just price.
just-in-time delivery system:	“Just-in-time delivery” is an approach that firms increasingly use to facilitate efficiency in manufacturing and distribution processes, which cuts costs by restocking inventories based strictly on the current demand for a particular product.
just-in-time inventory:	“Just in time” inventory management is a growing trend that entails the arrival of materials at the same time they are needed for production purposes. This process enhances efficiency and reduces storage costs, and is a technique that Sam Walton adapted and which helped boost Wal-Mart into a dominant retail chain.