Prosperity and Depression: A Theoretical Analysis of Cyclical Movements

Prosperity and Depression: A Theoretical Analysis of Cyclical Movements

Prosperity and Depression: A Theoretical Analysis of Cyclical Movements

Prosperity and Depression: A Theoretical Analysis of Cyclical Movements

Excerpt

As has been explained in the Preface, this book is a first step in a more extended enquiry undertaken by the Economic Intelligence Service of the Secretariat of the League of Nations into the causes of the recurrence of periods of economic depression.

The present study confines itself to the task of analysing existing theories of the business cycle and deriving therefrom a synthetic account of the nature and possible causes of economic fluctuations. However, the next stage in this investigation--the application, as far as possible, of quantitative tests to the various causal hypotheses--has largely influenced the manner in which the preliminary problem has been approached in the following pages. The reader is invited to keep in mind, while studying the present report, the fact that it is planned as but a part of a greater whole.

Analysis of theories.

In view of the scope of the investigation as a whole, the purpose of the first part of this report-- i.e., of the Systematic Analysis of the Theories of the Business Cycle--is not to present a history of the development of economic thought on this subject (although every attempt has been made to interpret as accurately as possible the meaning of the various writers whose theories are discussed), nor to give anything like an exhaustive bibliography of business- cycle theory. The purpose is rather to gather together various hypotheses of explanation, to test their logical consistency and their compatibility with one another and with accepted economic principles. It is intended to give a rounded picture of the possible explanations of economic fluctuations and it is hoped that, by theoretical reasoning, the number of these possibilities can be considerably reduced.

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