Business cycle: Difference between revisions
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'''Business cycles''' are the result of [[production]] fluctuation, that is GDP which is related to level of [[unemployment]] and [[inflation]]. In other words, this are fluctuations in economic activity characterized by periods of rising and falling fiscal health. | '''Business cycles''' are the result of [[production]] fluctuation, that is GDP which is related to level of [[unemployment]] and [[inflation]]. In other words, this are fluctuations in economic activity characterized by periods of rising and falling fiscal health. | ||
==Causes== | ==Causes== | ||
Business cycles are caused by various types of factors like: '''wars''', '''oil [[price]] fluctuation''', '''new inventions''' etc. What is more economic policy also matters. Economic fluctuation is inevitable and it cannot be stopped. It can only be reduced or in some cases increased, which is not craved. | Business cycles are caused by various types of factors like: '''wars''', '''oil [[price]] fluctuation''', '''new inventions''' etc. What is more economic policy also matters. Economic fluctuation is inevitable and it cannot be stopped. It can only be reduced or in some cases increased, which is not craved. | ||
==Types/Theories== | ==Types/Theories== | ||
* '''Kitchin cycles''': 40 months | * '''Kitchin cycles''': 40 months | ||
* '''Juglar cycles''': 9 to 11 years | * '''Juglar cycles''': 9 to 11 years | ||
* '''Kondratiev cycles''': 45 to 60 years | * '''Kondratiev cycles''': 45 to 60 years | ||
* '''Kuznets cycles''': 15 to 18 years | * '''Kuznets cycles''': 15 to 18 years | ||
One of the first researcher that was interested in business cycles was French [[economist]] [https://en.wikipedia.org/wiki/Cl%C3%A9ment_Juglar Clement Juglar] (1819-1905). After the World War cycles were examined by Russian economist [https://en.wikipedia.org/wiki/Nikolai_Kondratiev Nikolai Kondratiev] (1892-1930?) and Americans: [https://en.wikipedia.org/wiki/Simon_Kuznets Simon Kuznets] (1901-1985), [https://en.wikipedia.org/wiki/Joseph_Kitchin Joseph Kitchin], [https://en.wikipedia.org/wiki/Wesley_Clair_Mitchell Wesley Clair Mitchell] (1874-1948) and [https://en.wikipedia.org/wiki/Joseph_Schumpeter Joseph Schumpeter] (1883-1950). | One of the first researcher that was interested in business cycles was French [[economist]] [https://en.wikipedia.org/wiki/Cl%C3%A9ment_Juglar Clement Juglar] (1819-1905). After the World War cycles were examined by Russian economist [https://en.wikipedia.org/wiki/Nikolai_Kondratiev Nikolai Kondratiev] (1892-1930?) and Americans: [https://en.wikipedia.org/wiki/Simon_Kuznets Simon Kuznets] (1901-1985), [https://en.wikipedia.org/wiki/Joseph_Kitchin Joseph Kitchin], [https://en.wikipedia.org/wiki/Wesley_Clair_Mitchell Wesley Clair Mitchell] (1874-1948) and [https://en.wikipedia.org/wiki/Joseph_Schumpeter Joseph Schumpeter] (1883-1950). | ||
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* [[Hyman Minsky]] | * [[Hyman Minsky]] | ||
==Phases of cycle development== | ==Phases of cycle development== | ||
# '''boom, expansion''' (increase in production and prices, low interests rates) | # '''boom, expansion''' (increase in production and prices, low interests rates) | ||
# '''recession, crisis''' (stock exchanges crash and multiple bankruptcies of firms occur) | # '''recession, crisis''' (stock exchanges crash and multiple bankruptcies of firms occur) | ||
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{{infobox5|list1={{i5link|a=[[Economic situation]]}} — {{i5link|a=[[Cost inflation]]}} — {{i5link|a=[[Inflation import]]}} — {{i5link|a=[[Austrian business cycle theory]]}} — {{i5link|a=[[Supply shock]]}} — {{i5link|a=[[Arthur Cecil Pigou]]}} — {{i5link|a=[[Demand shock]]}} — {{i5link|a=[[Over-valued currency]]}} — {{i5link|a=[[David Ricardo]]}} }} | {{infobox5|list1={{i5link|a=[[Economic situation]]}} — {{i5link|a=[[Cost inflation]]}} — {{i5link|a=[[Inflation import]]}} — {{i5link|a=[[Austrian business cycle theory]]}} — {{i5link|a=[[Supply shock]]}} — {{i5link|a=[[Arthur Cecil Pigou]]}} — {{i5link|a=[[Demand shock]]}} — {{i5link|a=[[Over-valued currency]]}} — {{i5link|a=[[David Ricardo]]}} }} | ||
==References== | ==References== | ||
* Cooley, T. F. (1995). Frontiers of business cycle research. | * Cooley, T. F. (1995). Frontiers of business cycle research. | ||
* Prescott, E. C. (1986, September). ''[http://www.academia.edu/download/30394677/prescott_minn86.pdf Theory ahead of business-cycle measurement]''. In Carnegie-Rochester Conference Series on Public Policy (Vol. 25, p. 11-44). North-Holland. | * Prescott, E. C. (1986, September). ''[http://www.academia.edu/download/30394677/prescott_minn86.pdf Theory ahead of business-cycle measurement]''. In Carnegie-Rochester Conference Series on Public Policy (Vol. 25, p. 11-44). North-Holland. | ||
Latest revision as of 17:41, 17 November 2023
Business cycles are the result of production fluctuation, that is GDP which is related to level of unemployment and inflation. In other words, this are fluctuations in economic activity characterized by periods of rising and falling fiscal health.
Causes
Business cycles are caused by various types of factors like: wars, oil price fluctuation, new inventions etc. What is more economic policy also matters. Economic fluctuation is inevitable and it cannot be stopped. It can only be reduced or in some cases increased, which is not craved.
Types/Theories
- Kitchin cycles: 40 months
- Juglar cycles: 9 to 11 years
- Kondratiev cycles: 45 to 60 years
- Kuznets cycles: 15 to 18 years
One of the first researcher that was interested in business cycles was French economist Clement Juglar (1819-1905). After the World War cycles were examined by Russian economist Nikolai Kondratiev (1892-1930?) and Americans: Simon Kuznets (1901-1985), Joseph Kitchin, Wesley Clair Mitchell (1874-1948) and Joseph Schumpeter (1883-1950).
Theories on the causes of business cycles consider various possible factors; however, none has conclusively delineated the underlying causes for fluctuations.
See also:
Phases of cycle development
- boom, expansion (increase in production and prices, low interests rates)
- recession, crisis (stock exchanges crash and multiple bankruptcies of firms occur)
- depression (drops in prices and in output, high interests rates)
- recovery (stocks recover because of the fall in prices and incomes)
| Business cycle — recommended articles |
| Economic situation — Cost inflation — Inflation import — Austrian business cycle theory — Supply shock — Arthur Cecil Pigou — Demand shock — Over-valued currency — David Ricardo |
References
- Cooley, T. F. (1995). Frontiers of business cycle research.
- Prescott, E. C. (1986, September). Theory ahead of business-cycle measurement. In Carnegie-Rochester Conference Series on Public Policy (Vol. 25, p. 11-44). North-Holland.
- Schumpeter, J. A. (1934). The theory of economic development: An inquiry into profits, capital, credit, interest, and the business cycle (Vol. 55). Transaction publishers.
Author: Rafał Szkaradek
