Business cycle theory is normally described as having evolved out of a previous tradition of writers focusing exclusively on crises. In this account, the turning point is…
Business cycle theory is normally described as having evolved out of a previous tradition of writers focusing exclusively on crises. In this account, the turning point is seen as residing in Clément Juglar's contribution on commercial crises and their periodicity. It is well known that the champion of this view is Schumpeter, who propagated it on several occasions. The same author, however, pointed to a number of other writers who, before and at the same time as Juglar, stressed one or another of the aspects for which Juglar is credited primacy, including the recognition of periodicity and the identification of endogenous elements enabling the recognition of crises as a self-generating phenomenon. There is indeed a vast literature, both primary and secondary, relating to the debates on crises and fluctuations around the middle of the nineteenth century, from which it is apparent that Juglar's book Des Crises Commerciales et de leur Retour Périodique en France, en Angleterre et aux États-Unis (originally published in 1862 and very much revised and enlarged in 1889) did not come out of the blue but was one of the products of an intellectual climate inducing the thinking of crises not as unrelated events but as part of a more complex phenomenon consisting of recurring crises related to the development of the commercial world – an interpretation corroborated by the almost regular occurrence of crises at about 10-year intervals.
Theories of the business cycle can be classified into two main groups, exogenous and endogenous, according to the way they explain economic fluctuations – either as…
Theories of the business cycle can be classified into two main groups, exogenous and endogenous, according to the way they explain economic fluctuations – either as responses of the economy to factors that are external (exogenous shocks) or as upturns and downturns of the economic system internally generated (by endogenous factors). In endogenous theories, investment is generally a key variable to explain the dynamic status of the economy. This essay examines the role of investment in endogenous theories. Two contrasting views on how changes in investment and profitability push the economy towards expansion or contraction are represented by the insights of Kalecki, Keynes, Matthews and Minsky versus those of Marx and Mitchell. Hyman Minsky claimed that investment ‘calls the tune’ to indicate that investment is the only variable not determined by other variables, so that future profits, investment and the dynamic status of the economy are determined by current investment and investment in the near past. However, this hypothesis does not appear to be supported by available empirical data for 251 quarters of the US economy. Statistical evidence rather supports the hypothesis of causality in the direction of profits determining investment and, in this way, leading the economy towards boom or bust.
This chapter investigates the nature of the transformation of macroeconomics by focusing on the impact of the Great Depression on economic doctrines. There is no doubt…
This chapter investigates the nature of the transformation of macroeconomics by focusing on the impact of the Great Depression on economic doctrines. There is no doubt that the Great Depression exerted an enormous influence on economic thought, but the exact nature of its impact should be examined more carefully. In this chapter, I examine the transformation from a perspective which emphasizes the interaction between economic ideas and economic events, and the interaction between theory and policy rather than the development of economic theory. More specifically, I examine the evolution of what became known as macroeconomics after the Depression in terms of an ongoing debate among the “stabilizers” and their critics. I further suggest using four perspectives, or schools of thought, as measures to locate the evolution and transformation; the gold standard mentality, liquidationism, the Treasury view, and the real-bills doctrine. By highlighting these four economic ideas, I argue that what happened during the Great Depression was the retreat of the gold standard mentality, the complete demise of liquidationism and the Treasury view, and the strange survival of the real-bills doctrine. Each of those transformations happened not in response to internal debates in the discipline, but in response to government policies and real-world events.
Seeks to demonstrate that the Talmudic scholars possessed theoretical knowledge and practical experience regarding the market phenomenon of business disturbances, recognizing the existence of a causal relationship between the physical determinants of the cycles of the weather patterns and the fortunes of the agricultural sector, a condition which affected the economy as a whole. Discusses this linkage with respect to the insights in Johanan′s works. These come close to Hawtrey′s view of the business cycle as a monetary phenomenon, on the one hand, and Samuelson′s discussion of “supply shock” as a result of “...droughts and crop failures in agriculture”, on the other. Johanan also recognized the existence of a quantitativerelationship between money and prices, and prices and incomes. This suggests that the Talmudic scholars had come to appreciate the fundamentals of what was later to emerge as the quantity theory of money.
Kalecki's theory of the business cycle is rightly renowned for various reasons: in particular, besides itself providing an original contribution, it set the framework for Kalecki's ideas on effective demand, for his anticipation of a number of Keynesian elements, and for the development of Kalecki's related themes such as income determination and distribution. Although the secondary literature (both technical and descriptive) on this subject is immense, a specific aspect seems to deserve further reflection.
Nobody concerned with political economy can neglect the history of economic doctrines. Structural changes in the economy and society influence economic thinking and…
Nobody concerned with political economy can neglect the history of economic doctrines. Structural changes in the economy and society influence economic thinking and, conversely, innovative thought structures and attitudes have almost always forced economic institutions and modes of behaviour to adjust. We learn from the history of economic doctrines how a particular theory emerged and whether, and in which environment, it could take root. We can see how a school evolves out of a common methodological perception and similar techniques of analysis, and how it has to establish itself. The interaction between unresolved problems on the one hand, and the search for better solutions or explanations on the other, leads to a change in paradigma and to the formation of new lines of reasoning. As long as the real world is subject to progress and change scientific search for explanation must out of necessity continue.
The purpose of this paper is to explain how the process of change is determined by the product lifecycle and the product lifecycle's relation to the organization structure.
This paper is based on years of experience helping business organizations adapt to change by installing computer systems and consulting with senior management in this process.
Business organizations are highly variable in their structure, it is the environment that determines the organization structure. Where businesses are in a stable environment business organizations are capital intensive. Where the environment is highly volatile capital investment is limited and small flexible organizations prevail. In addition, there is a biological theory that totally parallels this theory.
Those who fail to understand the concepts are inclined to make massive mistakes in capital investment. This is often the reason why small startup companies are able to beat out larger established competitors in highly volatile environments.
In this chapter, we explore whether various true, endogenous social cycle theories share common patterns and characteristics.
We examine a number of prominent social theories describing cyclical patterns, and attempt to abstract an ideal type common to all of them, based on the idea of two populations disrupting each other and adjusting to the other’s disruptions.
At the core of such theories we typically find a variation of a two-population model. In these theories, cycles emerge when one of the populations seems to disrupt the other population’s plans, leading to recurring adjustments and disruptions that constitute the cycle.
Finding such commonalities in the world of theories can be useful for several reasons. For one thing, noticing that two theories share certain traits may help us understand each of them better. Furthermore, we show that agent-based modelers using modern object-oriented programming techniques can benefit from finding common patterns in theories.
This paper aims to review property cycle theory and the relevance of the larger body of knowledge about cycles with reference to the housing market. It also aims to…
This paper aims to review property cycle theory and the relevance of the larger body of knowledge about cycles with reference to the housing market. It also aims to highlight the lack of research into property cycles in the residential sector on a suburb or smaller region basis, as well as the potential for increased knowledge about cycles to assist to avoid housing stress.
The paper conducts a literature review of previous cycle research and encourages the use of cycle theory. It discusses the established body of knowledge about business cycles and the office market sector, as well as investigating levels of housing affordability and how detailed knowledge about property cycles can assist to decrease housing affordability in residential areas, which will eventually experience a downturn.
It is argued that an increased level of certainty about cycle behaviour in particular suburbs will give households a higher level of confidence when considering whether and when to enter the market. Property cycle research has the potential to assist low‐income homeowners to better understand the characteristics of cycles and associated risks in each residential.
This is a conceptual paper and has conducted a review of cycle research and housing affordability in certain countries. Some areas or countries may be affected to varying degrees by property cycles and levels of housing affordability.
In extended periods of high volatility it is argued that a better understanding of housing cycles will allow more homeowners to avoid negative equity and the stress associated with repossessions. Property cycles are unavoidable although there is typically relatively little information available in the open market about the timing and amplitude of cycles in individual areas.
This paper is unique as it highlights the potential for property cycles to be used to avoid housing stress in the residential market. Traditionally cycle research is used to increase returns and avoid downturns in the office and/or business sectors.
Of all the various interventions into the market economy, which have been invented and implemented by man and state, those that historically have caused the gravest…
Of all the various interventions into the market economy, which have been invented and implemented by man and state, those that historically have caused the gravest consequences in the advanced industrialized economies surely are the inflationist policies, which lead inexorably to the business cycle in all of its various aspects and manifestations. In this paper, we shall attempt to trace through a number of socio-economic consequences and implications of the business cycle. We are convinced that ultimately the business cycle has political implications, which are just as far reaching and grave as its numerous economic consequences.