The Causes of Economic Fluctuations: Possibilities of Anticipation and Control

By Willford I. King | Go to book overview

CHAPTER 12
THE POSSIBILITY OF FORECASTING BUSINESS FLUCTUATIONS

Harmonic Analysis. -- Were it true that business fluctuations were composed exclusively of a combination of sine curves, it should be possible, by aid of the mathematical process known as harmonic analysis, to isolate each sine curve and determine its wave length and amplitude. The fact has been pointed out in the last chapter that, if this could be done, forecasting the future course of business would be simplicity itself. All that would be necessary would be to produce into the future the various sine curves and add them together. The aggregate would constitute the desired picture. However, no one has as yet succeeded in breaking down the complex business graph into a set of simple sine curves. Whether the difficulty is that no such set of sine curves exists, or whether the real obstacle is the interference of too many accidental or sporadic factors, is still the subject of dispute among economists and statisticians.

Complexity of Business Fluctuations. -- The thing upon which all agree is that the pattern of the business curve is far from being a simple one. The truth of this statement is easily verified, if one inspects either Colonel Ayres' long record of business fluctuations, reproduced in Chart 2, or the Axe-Houghton- Annalist Index of Business Activity shown in Chart 38. In the latter case, a sine curve has been fitted as closely as possible to the index. While the deviations from the original graph are large, the sine curve does seem to give a rough fit in most parts of the series. When, however, the deviations from the sine curve are plotted in the form of a residual curve, it is by no means obvious that this residual curve is composed of other sine curves in combination. It appears, therefore, that if it actually is made up of

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The Causes of Economic Fluctuations: Possibilities of Anticipation and Control
Table of contents

Table of contents

  • Title Page i
  • Preface v
  • Contents vii
  • Charts xiii
  • Chapter 1 - INTRODUCTION 3
  • References 18
  • Chapter 2 - CHARACTERISTICS OF BUSINESS DEPRESSIONS 20
  • References 47
  • Chapter 3 - RECORD OF BUSINESS DEPRESSIONS IN THE UNITED STATES 49
  • References 72
  • Chapter 4 - MISLEADING EXPLANATIONS OF THE ORIGINS OF DEPRESSIONS 74
  • References 107
  • Chapter 5 - INADEQUATE EXPLANATIONS OF THE ORIGINS OF DEPRESSIONS 109
  • References 124
  • Chapter 6 - THE DEPRESSION CULTURE-MEDIUM 125
  • REFFRENCES 134
  • Chapter 7 - THE DEPRESSION'S ORIGIN 138
  • References 168
  • Chapter 8 - FORCES TENDING TO ACCENTUATE AND PROLONG DEPRESSIONSS 169
  • References 194
  • Chapter 9 - INEFFECTIVE WAYS OF COMBATING DEPRESSION 196
  • References 207
  • Chapter 10 - FORCES COMMONLY TENDING TO END DEPRESSION 209
  • References 222
  • Chapter 11 - CYCLES 223
  • References 244
  • Chapter 12 - THE POSSIBILITY OF FORECASTING BUSINESS FLUCTUATIONS 247
  • References 263
  • Chapter 13 - SOCIAL COST OF UNSTABLE PRODUCTION 266
  • References 279
  • Chapter 14 - WAYS TO MINIMIZE DEPRESSION 282
  • References 311
  • Chapter 15 - WAYS TO MINIMIZE DEPRESSION (CONTINUED) 313
  • References 337
  • Index 339
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