Business Cycle

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‘A type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprises: a cycle consists of expansions occurring at about the same time in many economic activities, followed by similarly general recessions, contractions, and revivals which merge into the expansion phase of the next cycle; this sequence of changes is recurrent but not periodic; in duration business cycles vary from more than one year to ten or twelve years’ (Mitchell).

Previously these were known as periodic ‘commercial crises’. The NATIONAL BUREAU OF ECONOMIC RESEARCH has studied these

cycles since 1920. HABERLER, in an extensive survey of business cycle research, noted the many possible causes of cycles, including credit changes, overinvestment, costs of production, underconsumption, mass psychology, variations in harvests—the interaction of the MULTIPLIER and the ACCELERATOR and international influences. More recently, the cycle of elections in democratic countries has been associated with fluctuations in national economies. (See figure.)

See also: accelerator principle; Juglar cycle; Kitchin cycle; Kondratieff cycle; Kuznets cycle; political business cycle

Bowers, D.A. (1985) An Introduction to Business Cycles and Forecasting, Reading, MA, and Wokingham: Addison-Wesley

Burns, A.F.

and Mitchell, W.C. (1946) Measuring Business Cycles, New York: National Bureau of Economic Research.

Haberier, G. (1958) Prosperity and Depression. A Theoretical Analysis of Cyclical Movements, 3rd edn. London: Allen & Unwin.

Mitchell, W.C. (1927) Business Cycles: The Problem and its Setting, New York: National Bureau of Economic Research; London: Pitman.

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