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On sensitivity of industries and companies to the state of economy

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  • M.S. Konovalova
  • A.G. Maksimov

Abstract

Cyclicality in industries and companies is scrutinized in the paper. Cyclical industry/firm is that which parameters (in particular, value added by industry and economic value added) have high correlation with the parameter reflecting economic cycles (in particular, GNP). The theoretic approval for the thesis that durable goods industries are more cyclical than nondurable ones is already provided. The aim of the research is to conduct an empirical analysis of cyclicality of Canadian and Russian industries in terms of the aforementioned statement and cyclicality of Russian companies as components of industrial structure. According to the results, the extents of cyclicality of durable and nondurable goods industries in Canada are equal. The theoretical thesis under consideration is correct for the industrial structure of Russia: durable goods industries in Russia are more cyclical than nondurable ones. Moreover, Russian companies also comply with the aforementioned statement. In addition to this, the effect of asymmetrical reaction of industries and companies on expansion and contraction happening in the economy as well as a role of company’s management in regulation of the extent of cyclicality of a company are considered in the paper.

Suggested Citation

  • M.S. Konovalova & A.G. Maksimov, 2017. "On sensitivity of industries and companies to the state of economy," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1299074-129, January.
    • Handle: RePEc:taf:oaefxx:v:5:y:2017:i:1:p:1299074
    DOI: 10.1080/23322039.2017.1299074
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    References listed on IDEAS

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    1. Noam, Eli M., 2006. "Fundamental instability: Why telecom is becoming a cyclical and oligopolistic industry," Information Economics and Policy, Elsevier, vol. 18(3), pages 272-284, September.
    2. Petersen, Bruce & Strongin, Steven, 1996. "Why Are Some Industries More Cyclical Than Others?," Journal of Business & Economic Statistics, American Statistical Association, vol. 14(2), pages 189-198, April.
    3. Domowitz, Ian & Hubbard, R Glenn & Petersen, Bruce C, 1988. "Market Structure and Cyclical Fluctuations in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 55-66, February.
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    1. Mirza Aqeel Baig & Shahida Wizarat & Javed Iqbal, 2020. "How Pakistani Industries Respond to Local and World Business Cycles," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(12), pages 1480-1495, December.

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