Development blocks, malinvestment and structural tensions – the Åkerman–Dahmén theory of the business cycle

2010 ◽  
Vol 7 (1) ◽  
pp. 105-129 ◽  
Author(s):  
LENNART ERIXON
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Institutional Theory ◽  
Financial Market ◽  
Turning Points ◽  
Optimization Models ◽  
Market Conditions ◽  
Modern Business ◽  
The Business Cycle

Abstract:Johan Åkerman and Erik Dahmén's institutional theory of economic fluctuations is a constructive alternative to traditional macroeconomic approaches and also to modern business-cycle analysis based on microeconomic optimization models. By its integration of a business-cycle and growth perspective, Åkerman and Dahmén's analysis was similar to that of Schumpeter in Business Cycles. But their notions of malinvestment, structural tensions, and development blocks provided an original explanation of the turning points in the business cycle. The Åkerman–Dahmén approach is more valid for innovation-driven cycles such as the ICT boom in the late 1990s and the subsequent crisis than for cycles with an independent role of financial-market conditions.

Dating business cycles in India

2017 ◽  
Vol 10 (1) ◽  
pp. 32-61 ◽  
Author(s):  
Radhika Pandey ◽  
Ila Patnaik ◽  
Ajay Shah
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Turning Points ◽  
Growth Cycle ◽  
Macroeconomic Shocks ◽  
Content Type ◽  
Reform Period ◽  
Cyclical Component ◽  
Policy Work ◽  
The Business Cycle

Purpose This paper aims to present a chronology of Indian business cycles in the post-reform period. In India, earlier, macroeconomic shocks were about droughts and oil prices. Economic reforms have led to an interplay of a market economy, financial globalisation and decisions of private firms to undertake investment and hold inventory. This has changed the working of the business cycle and has raised concerns about business-cycle stabilisation. In the backdrop of these developments, the macroeconomics research agenda requires foundations of measurement about business-cycle phenomena. One element of this is the identification of dates of business-cycle turning points. Design/methodology/approach This paper uses the growth-cycle approach to present the chronology of business cycles. The paper uses the Christiano–Fitzgerald (CF) filter to extract the cyclical component and shows the robustness of the findings to the contemporary methods of cycle extraction. It then applies the Bry–Boschan algorithm to identify the dates of peaks and troughs. Findings The paper finds three periods of recession. The first recession was from 1999-Q4 to 2003-Q1; the second recession was from 2007-Q2 to 2009-Q3; and the third recession ran from 2011-Q2 till 2012-Q4. These results are robust to the choice of filter and to the choice of the business-cycle indicator. These dates suggest that, on average, expansions in India are 12 quarters in length and recessions run for 9 quarters. The paper offers evidence of change in the nature of cycles. Originality/value Dates of business-cycle turning points are a critical input for academic and policy work in macroeconomics. The paper offers robust estimation of the business-cycle turning points in the post-reform period using contemporary techniques of cycle extraction. This work helps lay the foundations for downstream macroeconomics research by academicians and policymakers.

ASYMMETRY AND THE AMPLITUDE OF BUSINESS CYCLE FLUCTUATIONS: A QUANTITATIVE INVESTIGATION OF THE ROLE OF FINANCIAL FRICTIONS

2016 ◽  
Vol 22 (2) ◽  
pp. 279-306 ◽  
Author(s):  
Manoj Atolia ◽  
John Gibson ◽  
Milton Marquis
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Financial Frictions ◽  
Quantitative Investigation ◽  
Macroeconomic Volatility ◽  
Access To Credit ◽  
Business Cycle Fluctuations ◽  
Key Features ◽  
The Business Cycle

We examine the quantitative significance of financial frictions that reduce firms' access to credit in explaining asymmetric business cycles characterized by disproportionately severe downturns. Using rate spread data to calibrate the severity of these frictions, we successfully match several key features of U.S. data. Specifically, although output and consumption are relatively symmetric (with output being slightly more asymmetric), investment and hours worked display significant asymmetry over the business cycle. We also demonstrate that our financial frictions are capable of significantly amplifying adverse shocks during severe downturns. Although the data suggest that these frictions are only active occasionally, our results indicate that they are still a significant source of macroeconomic volatility over the business cycle.

Predicting returns over several decades

2021 ◽  
pp. 292-312
Author(s):  
Jesper Rangvid
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Interest Rates ◽  
Stock Price ◽  
Turning Points ◽  
Long Run ◽  
The Business Cycle

This chapter looks at expectations of returns several decades out. This is obviously a difficult task, as fundamental economic structures might change over such long periods. But we need multi-decade forecasts in certain situations. One conclusion of this chapter is that we must look beyond variables that predict turning points in the business cycle and stock-price multiples when dealing with the very long run. Over multiple decades, we will live through multiple business cycles. Variables that predict the next business cycle will not be particularly informative about the returns we expect over many decades. The chapter focuses on the deep underlying drivers of long-run returns, primarily expectations to long-run economic activity.The chapter also looks at expected long-run interest rates.

Business Cycles and Turning Points: A Survey of Statistical Techniques

2003 ◽  
Vol 183 ◽  
pp. 90-106 ◽  
Author(s):  
Michael Massmann ◽  
James Mitchell ◽  
Martin Weale
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Turning Points ◽  
Statistical Techniques ◽  
The Business Cycle ◽  
The Uk

The business cycle has an importance in the popular debate which can tend to run ahead of the problems in measuring it. This paper provides a survey of the main statistical techniques that are used to measure the cycle. An application to the UK illustrates that the choice of what measure, or measures, to use is more than a dry academic issue. Inference about the business cycle is potentially sensitive to measurement. Fortunately, however, there is an element of consensus.

EXPANSIONS AND RECESSIONS IN THE MEXICAN STATES: A CLASSICAL BUSINESS CYCLES APPROACH

2017 ◽  
Vol 3 (5) ◽  
pp. 32
Author(s):  
Pablo Mejía-Reyes
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Monthly Basis ◽  
Production Index ◽  
Clear Cut ◽  
Output Measure ◽  
Central Regions ◽  
The Business Cycle ◽  
National Business ◽  
Cycle Indicator

This paper aims to document expansions and recessions characteristics for 17 states of Mexico over the period 1993-2006 by using a classical business cycle approach. We use the manufacturing production index for each state as the business cycle indicator since it is the only output measure available on a monthly basis. According to this approach, we analyse asymmetries in mean, volatility and duration as well as synchronisation over the business cycle regimes (expansions and recessions) for each case. Our results indicate that recessions are less persistent and more volatile (in general) than expansions in most Mexican states; yet, there is no clear cut evidence on mean asymmetries. In turn, there seems to be strong links between the business cycle regimes within the Northern and Central regions of the country and between states with similar industrialisation patterns, although it is difficult to claim that a national business cycle exists.

scholarly journals News-Driven Business Cycles: Insights and Challenges

2014 ◽  
Vol 52 (4) ◽  
pp. 993-1074 ◽  
Author(s):  
Paul Beaudry ◽  
Franck Portier
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Empirical Evidence ◽  
Economic Fluctuations ◽  
Aggregate Fluctuations ◽  
Business Cycle Fluctuations ◽  
Widespread Belief ◽  
Way Of Thinking ◽  
The Many

There is a widespread belief that changes in expectations may be an important independent driver of economic fluctuations. The news view of business cycles offers a formalization of this perspective. In this paper we discuss mechanisms by which changes in agents' information, due to the arrival of news, can cause business cycle fluctuations driven by expectational change, and we review the empirical evidence aimed at evaluating their relevance. In particular, we highlight how the literature on news and business cycles offers a coherent way of thinking about aggregate fluctuations, while at the same time we emphasize the many challenges that must be addressed before a proper assessment of the role of news in business cycles can be established. (JEL D83, D84, E13, E32, O33)

scholarly journals Forecasting Macedonian Business Cycle Turning Points Using Qual Var Model

2016 ◽  
Vol 5 (3) ◽  
pp. 61-78
Author(s):  
Magdalena Petrovska ◽  
Aneta Krstevska ◽  
Nikola Naumovski
Keyword(s):  
Business Cycle ◽  
Predictive Power ◽  
Turning Points ◽  
Probit Model ◽  
Economic Conditions ◽  
Var Model ◽  
Leading Indicators ◽  
Out Of Sample ◽  
The Business Cycle

Abstract This paper aims at assessing the usefulness of leading indicators in business cycle research and forecast. Initially we test the predictive power of the economic sentiment indicator (ESI) within a static probit model as a leading indicator, commonly perceived to be able to provide a reliable summary of the current economic conditions. We further proceed analyzing how well an extended set of indicators performs in forecasting turning points of the Macedonian business cycle by employing the Qual VAR approach of Dueker (2005). In continuation, we evaluate the quality of the selected indicators in pseudo-out-of-sample context. The results show that the use of survey-based indicators as a complement to macroeconomic data work satisfactory well in capturing the business cycle developments in Macedonia.

scholarly journals Inequality over the business cycle: the role of distributive shocks

2021 ◽  
pp. 1-30
Author(s):  
Marius Clemens ◽  
Ulrich Eydam ◽  
Maik Heinemann
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Business Cycle ◽  
Parameter Estimates ◽  
Panel Estimation ◽  
Bayesian Techniques ◽  
Elasticity Of Intertemporal Substitution ◽  
Ex Ante ◽  
The Business Cycle

Abstract This paper examines how wealth and income inequality dynamics are related to fluctuations in the functional income distribution over the business cycle. In a panel estimation for OECD countries between 1970 and 2016, although inequality is, on average countercyclical and significantly associated with the capital share, one-third of the countries display a pro- or noncyclical relationship. To analyze the observed pattern, we incorporate distributive shocks into an RBC model, where agents are ex ante heterogeneous with respect to wealth and ability. We find that whether wealth and income inequality behave countercyclically or not depends on the elasticity of intertemporal substitution and the persistence of shocks. We match the model to quarterly US data using Bayesian techniques. The parameter estimates point toward a non-monotonic relationship between productivity and inequality fluctuations. On impact, inequality increases in response to TFP shocks but subsequently declines. Furthermore, TFP shocks explain 17% of inequality fluctuations.

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