Goodhart Law
The Goodhart Law is a law developed by Professor Charles Goodhart (who has also served as a member of the Monetary Policy Committee) that says "that any observed statistical regularity will tend to collapse once pressure is placed on it for control purposes". In other words if a relationship between two variables is observed, and the government then try to use this relationship as a policy tool, the whole relationship is likely to break down. |
Similar financial terms
Tax clawback agreementAn agreement to contribute as equity to a project the value of all previously realized project-related tax benefits not already clawed back to the extent required to cover any cash deficiency of the project.
Law of one price
An economic rule stating that a given security must have the same price regardless of the means by which one goes about creating that security. This implies that if the payoff of a security can be synthetically created by a package of other securities, the price of the package and the price of the security whose payoff it replicates must be equal.
Law of large numbers
The mean of a random sample approaches the mean (expected value) of the population as the sample grows.
Blue-sky laws
State laws covering the issue and trading of securities.
Demand, law of
Ceteris paribus, the lower the price of a good (or service), the greater the quantity of it that will be demanded by purchasers at any given time.
