Business Fluctuations, Growth, and Economic Stabilization: A Reader

Business Fluctuations, Growth, and Economic Stabilization: A Reader

Business Fluctuations, Growth, and Economic Stabilization: A Reader

Business Fluctuations, Growth, and Economic Stabilization: A Reader

Excerpt

A major part of any science is simply useful classification. Business fluctuations extend far beyond "the business cycle." Over the past century or so, economists have discovered three main divisions of business fluctuations: seasonal, cyclical, and long-run. (There are, besides, irregular or random fluctuations which represent singular events, such as famines, wars, earthquakes, and tidal waves.) Although none of the articles below deals exclusively with seasonal fluctuations, the authors by no means consider them irrelevant. In point of fact, seasonal fluctuations are important in their own right, and have to be corrected before the cyclical component can be studied. It is perfectly plain that short-term developments are greatly affected by seasonal fluctuations, and serious errors can result if the seasonal factor is ignored.

The business cycle, in Mitchell's sense, is a congeries of fluctuations in a wide variety of economic phenomena. There is no such thing as "the" business cycle; rather, there are subcycles in almost every phase of economic activity. This is not to say that the approach to business fluctuations is to seek and find mechanical relationships which can be reduced to mathematical form and extrapolated. Whatever history has shown, it has made clear that cycles do differ widely, and averages of past cyclical experience can sometimes be misleading.

Some sectors of the economy are more susceptible to fluctuations than others. Cycles in home-building and inventories are leading examples. Cycles in fixed investment, plant and equipment expenditures, and consumer durable outlays are others. Each must be studied separately as individual units as well as in terms of component parts, such as cycles in . . .

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