Business Cycles

By Zerwitz, Donna L. | NBER Reporter, Spring 1989 | Go to article overview

Business Cycles


Zerwitz, Donna L., NBER Reporter


Business Cycles(1)

While many readers of the popular press are familiar with such terms as "recession" and "expansion," few are likely to know that these downs and ups in the economy have been the subject of research at the NBER for nearly 70 years. Indeed, Wesley C. Mitchell, one of the Bureau's founders and its director of research for the first 25 years, had published a treatise on Business Cycles in 1913. When the NBER's certificate of incorporation was signed and recorded in 1920, business cycles had already been designated as the Bureau's second project, to follow the development of a series of national income accounts.

Business cycles are merely recurrent sequences of ups and downs in economic activity. These ups and downs are important because they represent major fluctuations in employment, production, real income, and real sales.

Shortly after the Bureau's founding, the NBER staff began to compile comprehensive chronological records of changes in economic conditions in the United States, England, France, Germany, Austria, and twelve other countries. These "business annals," as they were called, resulted in a 1926 volume with that title by Willard L. Thorp,(3) who is still a director emeritus on the NBER Board. (1)Much of the historical information in this article comes from S. Fabricant, Toward a Firmer Basis of Economic Policy: The Founding of the National Bureau of Economic Research, NBER pamphlet, 1984. (2)Director of Public Information, NBER. (3)W.L. Thorp, Business Annals, NBER General Series No. 8, 1926.

Also in the early 1920s, the NBER began collecting and analyzing time-series data on various aspects of modern economies. Narrowing the focus to the United States, England, France, and Germany, the NBER staff was able to compare these economic indicators to the trends described in the annals. Through a painstaking collective effort by a group of distinguished economists including Moses Abramovitz, Arthur F. Burns, Milton Friedman, Simon Kuznets, and Geoffrey H. Moore, the NBER finally compiled monthly, quarterly, and annual reference chronologies of business cycles. For the United States and Britain, these tables went back on a monthly basis to 1854.

In 1927, Mitchell published a volume on business cycles that established a workable definition and outlined a research program that was followed for many years thereafter.(4) In 1946, Burns and Mitchell rephrased the definition as follows: "Business cycles are a type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprises: a cycle consists of expansion occurring at about the same time in many economic activities, followed by similarly general recessions, contractions, and revivals that 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; they are not divisible into shorter cycles of similar character with amplitudes approximately their own."(5)

This definition has been used for more than 60 years and is still used today. It is particularly noteworthy that the definition places no fixed requirement on the duration of expansions and contractions, their amplitude, or their scope. Nor did Mitchell define "aggregate economic activity," because there is no single comprehensive measure available for a long historical period--on a monthly or quarterly basis--that is comparable throughout in its coverage and adequate throughout in its statistical foundation. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Business Cycles
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.