Professional Framing

Categories and Meaning

Accounting: direct and indirect

Direct associated with production or identifiable cost sector, compared with widely spread indirect costs.

Microeconomics: private and external

Private: the result of voluntary exchanges while external effects are involuntarily incurred (positively or negatively) by third parties. Pecuniary externalities are third party effects mediated through market prices.

Macroeconomics: direct, indirect, induced

Whether at the industry level or firm level, direct output effects are identified with a change in output of a specific firm or industry while indirect effects are those from industry production or market linkages. Induced effects occur when households are endogenous to the system and expand or contract activity as part of a general equilibrium system. Secondary effects can be either or both of indirect or induced.