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The Regularity of Business Cycles

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  • Victor Zarnowitz
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    Abstract

    Do business cycles have predictable periodicities or are they random walks without past regularities or predictive value? Arguments in support of either position are found in the literature, with no apparent convergence to an agreement. This paper first examines the implications of the NBER chronologies and other findings for the question of the regularity of business cycles. It discusses hypotheses and presents evidence concerning the incidence and coexistence of cycles with different periods. An extension of the analysis covers growth cycles in the United States and other major countries. The paper then considers different models -- linear, nonlinear, endogenous, and exogenous -- for what they have to say about the problem. The regularity of investment cycles and the possible asymmetries in cyclical behavior receive particular attention, and some related data and tests are provided. Our results suggest that business cycles defy simple characterizations: they show a strong tendency to recur and at times even near periodicity, along with great diversity and evolution of phase durations. The age of a phase is not of much help in predicting the date of its end; the regularities are mainly in the dynamics of the developing business conditions.

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    File URL: http://www.nber.org/papers/w2381.pdf
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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2381.

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    Date of creation: Sep 1987
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    Publication status: Published as "On the Dating of Business Cycles", Journal of Business, 1963, vol. 36, no. 2, pp. 179-199.
    Handle: RePEc:nbr:nberwo:2381

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    1. Blanchard, Olivier J, 1981. "What Is Left of the Multiplier Accelerator?," American Economic Review, American Economic Association, American Economic Association, vol. 71(2), pages 150-54, May.
    2. Neftici, Salih N., 1982. "Optimal prediction of cyclical downturns," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 4(1), pages 225-241, November.
    3. Olivier J. Blanchard & Mark W. Watson, 1987. "Are Business Cycles All Alike?," NBER Working Papers 1392, National Bureau of Economic Research, Inc.
    4. Harvey, A C, 1985. "Trends and Cycles in Macroeconomic Time Series," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 3(3), pages 216-27, June.
    5. Robert J. Gordon, 1986. "The American Business Cycle: Continuity and Change," NBER Books, National Bureau of Economic Research, Inc, number gord86-1.
    6. Schinasi, Garry J., 1982. "Fluctuations in a dynamic, intermediate-run IS-LM model: Applications of the Poincare-Bendixon theorem," Journal of Economic Theory, Elsevier, Elsevier, vol. 28(2), pages 369-375, December.
    7. Robert J. Gordon & John Veitch, 1986. "Fixed Investment in the American Business Cycle, 1919-83," NBER Chapters, in: The American Business Cycle: Continuity and Change, pages 267-358 National Bureau of Economic Research, Inc.
    8. McCulloch, J Hutson, 1975. "The Monte Carlo Cycle in Business Activity," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 13(3), pages 303-21, September.
    9. J. Bradford De Long & Lawrence H. Summers, 1986. "Are Business Cycles Symmetric?," NBER Working Papers 1444, National Bureau of Economic Research, Inc.
    10. Campbell, John Y & Mankiw, N Gregory, 1987. "Permanent and Transitory Components in Macroeconomic Fluctuations," American Economic Review, American Economic Association, American Economic Association, vol. 77(2), pages 111-17, May.
    11. Chow, Gregory C & Lin, An-loh, 1971. "Best Linear Unbiased Interpolation, Distribution, and Extrapolation of Time Series by Related Series," The Review of Economics and Statistics, MIT Press, vol. 53(4), pages 372-75, November.
    12. Day, Richard H, 1982. "Irregular Growth Cycles," American Economic Review, American Economic Association, American Economic Association, vol. 72(3), pages 406-14, June.
    13. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, Elsevier, vol. 10(2), pages 139-162.
    14. Philip A. Klein & Geoffrey H. Moore, 1985. "Monitoring Growth Cycles in Market-Oriented Countries: Developing and Using International Economic Indicators," NBER Books, National Bureau of Economic Research, Inc, number klei85-1.
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    Cited by:
    1. Joao Victor Issler & Hilton Notini & Claudia Rodrigues & Ana Flávia Soares, 2013. "Constructing coincident indices of economic activity for the Latin American economy," Revista Brasileira de Economia, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 67(1), pages 67-96, April.
    2. Miron, Jeffrey A. & Romer, Christina D., 1990. "A New Monthly Index of Industrial Production, 1884–1940," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 50(02), pages 321-337, June.

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