Hagkerfa

Hagkerfa is the Icelandic term for the economy or economic system of a country. It encompasses the production, distribution, and consumption of goods and services, together with the institutions, policies, and markets that shape economic activity.

Within hagkerfa, key actors include households, firms, financial institutions, and government. Markets coordinate resource use through product markets, labor markets, and financial markets. The economy relies on factors such as labor, capital, natural resources, and technology, and is organized through a mix of private and public sector activity.

Economists measure hagkerfa using indicators such as gross domestic product (GDP), unemployment, inflation, trade balance, and productivity. Data on investment, savings, and government deficits help assess cyclical conditions and long-term growth. International comparisons use exchange rates and purchasing power parity.

Policy instruments include fiscal policy (government spending and taxation) and monetary policy (interest rates and money supply). In Iceland, the central bank and the government coordinate to ensure price stability, financial system soundness, and sustainable growth. Structural policies may address labor market participation, education, and diversification of the economy.

In Iceland, the hagkerfa has been shaped by a small, open economy with abundant energy resources and a significant fishing sector. The 2008 financial crisis led to a severe contraction and implementation of capital controls; gradual recovery followed with reforms, a rebound in tourism, and investments in energy and technology sectors.

See also macroeconomics, economic policy, fiscal policy, and monetary policy.