scholarly journals Neglected Theories of Business Cycle—Alternative Ways of Explaining Economic Fluctuations

Data ◽  
2021 ◽  
Vol 6 (11) ◽  
pp. 109
Author(s):  
Klára Čermáková ◽  
Michal Bejček ◽  
Jan Vorlíček ◽  
Helena Mitwallyová
Keyword(s):  
Business Cycle ◽  
Theoretical Foundation ◽  
Behavioral Approach ◽  
Economic Fluctuations ◽  
Economic Research ◽  
Economic Cycle ◽  
Total Product ◽  
The Business Cycle ◽  
Individual Strategies ◽  
Insight Into

The business cycle is a frequent topic in economic research; however, the approach based on individual strategies often remains neglected. The aspiration of this study is to prove that the behavior of individuals can originate and fuel an economic cycle. For this purpose, we are using an algorithm based on a repeated dove–hawk game. The results reveal that the sum of output in a society is affected by the ratio of individual strategies. Cyclical changes in this ratio will be translated into fluctuations of the total product of society. We present game theory modelling of a strategic behavioral approach as a valid theoretical foundation for explaining economic fluctuations. This article offers an unusual insight into the business cycle’s causes and growth theories.

scholarly journals Are the New Basel III Capital Buffers Countercyclical? Exploring the Option of a Rule-Based Countercyclical Buffer

2018 ◽  
pp. 1-6
Author(s):  
Filippo Occhino
Keyword(s):  
Business Cycle ◽  
Banking System ◽  
Capital Requirements ◽  
Economic Fluctuations ◽  
Capital Regulation ◽  
Basel Iii ◽  
Rule Based ◽  
The Business Cycle ◽  
Over Time

Countercyclical capital regulation can reduce the procyclicality of the banking system and dampen aggregate economic fluctuations. I describe two new capital buffers introduced in Basel III and discuss why their countercyclical effects may be small. If over time regulators want to increase the degree of countercyclicality of capital regulation, they might consider adopting a rule-based countercyclical buffer, that is, a buffer that is automatically lowered during recessions according to a rule. I present a conservative example of such a rule and its effects on capital requirements over the business cycle.

scholarly journals Has The Business Cycle Been Dampened? The Case Of Canada, Sweden And The United States

2011 ◽  
Vol 24 (4) ◽  
Author(s):  
Bakhtiar Moazzami ◽  
Bahram Dadgostar
Keyword(s):  
United States ◽  
Business Cycle ◽  
The United States ◽  
Economic Fluctuations ◽  
Real Output ◽  
Economic Policies ◽  
Output Data ◽  
Bretton Woods ◽  
Stabilization Policies ◽  
The Business Cycle

Have postwar stabilization policies reduced economic fluctuations compared to earlier periods? Using output data for Canada, Sweden and the United States for the period 1929-2005 and three different de-trending procedures, we found that postwar economic policies have been successful in reducing business cycle volatility. We also found that fluctuations in real output have been significantly dampened during the post-Bretton Woods era compared to earlier periods.

scholarly journals Evaluating the Classification of Economic Activity into Recessions and Expansions

2011 ◽  
Vol 3 (2) ◽  
pp. 246-277 ◽  
Author(s):  
Travis J Berge ◽  
Óscar Jordá
Keyword(s):  
Business Cycle ◽  
Economic Activity ◽  
Turning Points ◽  
Economic Conditions ◽  
Economic Research ◽  
National Bureau ◽  
The Business Cycle ◽  
Business Cycle Dating

The Business Cycle Dating Committee of the National Bureau of Economic Research provides a historical chronology of business cycle turning points. We investigate three central aspects of this chronology. How skillful is the Dating Committee when classifying economic activity into expansions and recessions? Which indices of economic conditions best capture the current but unobservable state of the business cycle? And which indicators best predict future turning points, and at what horizons? We answer each of these questions in detail using methods specifically designed to assess classification ability. In the process, we clarify several important features of the business cycle. (JEL C82, E32)

scholarly journals Economic Fluctuations in Turkey in the Light of Business Cycle Theories

2012 ◽  
Author(s):  
Emine Fırat
Keyword(s):  
Business Cycle ◽  
Market Failure ◽  
Free Market ◽  
Economic Fluctuations ◽  
Past Century ◽  
Business Cycle Theory ◽  
Macroeconomic Policies ◽  
Business Cycle Model ◽  
The Business Cycle ◽  
The Right

Some economists have tried to demonstrate the cause of economic fluctuations and its solution with business cycle theories. The classical school emphasizes the efficiency of free market economy and the optimization of private economic factors. The Keynesian school believes that the causes of economic fluctuations arise from not only just the deviations from market equilibrium but also market failure on a grand scale. The debate over the source and propagation of economic fluctuations rages as fiercely today as it did in the Great Depression that began in 1929. Economic Fluctuation models investigate to answer the question of why economies go through boom and bust and why economies experience cycles of recession and recovery. In the economic literature, based on the Business Cycle Theories many different approaches have been proposed. While economists discuss the ultimate form of the right business cycle model, they must take into consideration the decisive factors of economic fluctuations in the past century. In this study, the local economic crisis occurred in Turkey in recent years are investigated in the light of Business Cycle Theory and also the effects of macroeconomic policies are evaluated on the basis of economic fluctuations models.

scholarly journals Real Business Cycles: A New Keynesian Perspective

1989 ◽  
Vol 3 (3) ◽  
pp. 79-90 ◽  
Author(s):  
N. Gregory Mankiw
Keyword(s):  
Business Cycle ◽  
Primary Source ◽  
New Keynesian ◽  
Economic Fluctuations ◽  
Real Business Cycle ◽  
Business Cycle Theory ◽  
Macroeconomic Policies ◽  
Real Business Cycles ◽  
The Business Cycle ◽  
Random Fluctuations

Real business cycle theory is the latest incarnation of the classical view of economic fluctuations. It assumes that there are large random fluctuations in the rate of technological change. In response to these fluctuations, individuals rationally alter their levels of labor supply and consumption. The business cycle is, according to this theory, the natural and efficient response of the economy to changes in the available production technology. In this essay, I appraise this newly revived approach to the business cycle. In my view, real business cycle theory does not provide an empirically plausible explanation of economic fluctuations. Both its reliance on large technological disturbances as the primary source of economic fluctuations and its reliance on the intertemporal substitution of leisure to explain changes in employment are fundamental weaknesses. Moreover, to the extent that it trivializes the social cost of observed fluctuations, real business cycle theory is potentially dangerous. The danger is that those who advise policymakers might attempt to use it to evaluate the effects of alternative macroeconomic policies or to conclude that macroeconomic policies are unnecessary.

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