business cycles


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business cycles,

fluctuations in economic activity characterized by periods of rising and falling fiscal health. During a business cycle, an economy grows, reaches a peak, and then begins a downturn followed by a period of negative growth (a recession), that ends in a trough before the next upturn. The theory of business cycles is generally attributed to French physician Clement Juglar, who proposed in 1862 that such fluctuations were to be expected in any economic system. Other later theorists developed Juglar's theory, arriving at business cycles of anywhere from 10 years to the half-century cycle suggested by Russian economist Nikolai Kondratieff. Many attempts have been made to equalize business cycles through monetary and fiscal policy decisions. During the 1970s and 80s, for instance, U.S. fiscal policy deliberately created a recession to combat inflation. Theories on the causes of business cycles consider various possible factors; however, none has conclusively delineated the underlying causes for fluctuations. Such 20th-century theorists as John Maurice Clark and Joseph Schumpeter have attempted to find cures for economic instability, rather than describing it as simply a natural phenomenon in the manner of many 19th-century theorists. The "underconsumption" theory, for instance, claims that an inordinate amount of income goes to the wealthy rather than to investment, thus producing instability.

Bibliography

See R. J. Gordon, ed., The American Business Cycle (1986) and W. C. Mitchell, Business Cycles and Their Causes (1989); A. W. Mullineux, Business Cycles and Financial Crises (1990).

References in periodicals archive ?
The model yields output probabilities of the current business cycle phase for each G7 country and for the aggregate OECD and G7 output measures, which can be used as a warning system to monitor country-specific and international business cycles.
The solid vertical lines in the figures cover the frequencies associated with the conventional definition of business cycles, [[pi]/9, [pi]/48], which correspond to cycles with periods ranging from one and a half to eight years.
Alvarez, Fernando, and Urban Jermann, 2000, "Using asset prices to measure the cost of business cycles," University of Chicago, working paper.
The reader of Simpson's book may fall under the impression that ABCT is the only valid theory of business cycles because it now has absorbed other theories into itself.
The welfare cost of business cycles is defined as the average welfare difference between two economies: one with and one without aggregate output fluctuations.
WASHINGTON -- As a tool for analyzing and influencing the economy, is the business cycle outdated?
Within the business model, it's very important to determine how the peers' business cycles have aligned with the company under study.
3) We aim to shed some lights on this issue by providing detailed stylized facts on capital flows and business cycles in the Asia Pacific region and by empirically analyzing the relationship between capital flows and business cycles.
17, 2012 /PRNewswire/ -- AdvisorShares, a leading sponsor of actively managed exchange-traded funds (ETFs), announced today that the Pring Turner Business Cycle ETF (NYSE Arca: DBIZ) will open for trading on Wednesday, December 19, 2012.
immigrants are more sensitive to the business cycle than are those of native-born Americans.
The approach of building an index and comparing that index to business cycles is a useful exercise for anyone wishing to identify an aggregate index for any sector and comparing that to the business cycle.