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Stability and Stabilization of Mature Economies

In: Nonlinearities, Disequilibria and Simulation

Author

Listed:
  • John Cornwall
  • Helge Brink
  • Björn Hansson
  • Carl-Louis Sandblom

Abstract

In this chapter I would like to outline a nonlinear model of the trade cycle in the spirit of Björn Thalberg’s study of 1971 to provide an explanation of an important fact of American economic history.1 Beginning with the period shortly after the American Civil War until approximately a century later, downturns in overall economic activity, if they were severe, were of short duration (for example, the recession of 1920–21); and if they were prolonged, they were rather mild (for example, the long recession at the turn of the century), with one exception. The one exception, of course, is the long and severe recession of the 1930s, the Great Depression. The importance of the issue can be highlighted by posing the following question: Why, under a system of decentralized economic decision-making, have severe and prolonged collapses not been a recurring phenomenon?2

Suggested Citation

  • John Cornwall & Helge Brink & Björn Hansson & Carl-Louis Sandblom, 1992. "Stability and Stabilization of Mature Economies," Palgrave Macmillan Books, in: Kumaraswamy Velupillai (ed.), Nonlinearities, Disequilibria and Simulation, chapter 9, pages 134-162, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-12227-1_9
    DOI: 10.1007/978-1-349-12227-1_9
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