Shock (economics)
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2008-07-13T15:53:43Z
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Klien's responce to Friedman
In [[economics]] a '''shock''' is an unexpected or unpredictable event that affects an economy, either positively or negatively. Resiliance to such events depends on general [[preparedness]], [[economic policy]], existing [[infrastructure]] and effective [[emergency management]] planning. The use of [[floating exchange rate]]s has been promoted as a way to dampen the effects of economic shocks.
[[Milton Friedman]], a prominent economist, has argued that financial shocks are routine and that government actions may hinder recovery through poor [[fiscal policy]]. [[Naomi Klien]], in her book [[The Shock Doctrine]], argues that the shocks Friedman refers to are enacted during times of widespread social duress, allowing political groups to initiate what would otherwise be unpopular policies (such as [[Augustus Pinochet]]'s [[1973 Chilean coup d'état|rise to power]] and rule in Chile, the creation of the [[Patriot Act]] after [[September 11, 2001 attacks|the September 11 attacks]], or the rise to power of [[Iraqi insurgency|insurgents in Iraq]] during the 2003 [[Iraq War]]).
==Types==
If the [[shock]] is due to constrained supply it is called a [[supply shock]] and usually results in price increases for a particular product. A [[technology shock]] is the kind resulting from a technological development that affects [[productivity]].
Shocks can also be produced when [[accident]]s or [[disaster]]s occur. The [[2008 Western Australian gas crisis]] resulting from a pipeline explosion at [[Varanus Island]] is one example.
==See also==
{{portal|Economics}}
*[[Oil crisis]]
*[[Shock therapy (economics)|Shock therapy]]
*[[Social risk management]]
*[[The Shock Doctrine]]
==References==
{{reflist}}
{{Unreferenced|date=July 2008}}
[[Category:Economics terminology]]
[[Category:Information, knowledge, and uncertainty]]
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[[de:Schock (Volkswirtschaftslehre)]]