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Economic cycles: historical evidence, classification and explication

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  • Bormotov, Michael

Abstract

Severe economic fluctuations which had recently hit the entire world economy after relatively prosperous decades despite numerous institutional efforts to control them have recalled an interest to the theory of economic cycles. Historical data on main economic indexes and academic evidence show that recurrent fluctuations in the pace of economic growth are consistent over time. Technological revolutions and worldwide implementation of basic inventions are necessarily accompanied by the processes of creative destruction or “sanitation” of the economy, which cause long term economic cycles which appear to be predictable but practically unavoidable. This paper explores the theoretical background and formulates the basics of the mechanism of economic cycles driven endogenously by modern knowledge based economy. It analyzes definitions of economic cycles, employs the concept of hierarchical economic cycles, studies the links between inventions, innovations and economic cycles, provides a concept of “economic organism” versus “economic mechanism”, gives a definition of “good cycles” versus “bad cycles” and proposes taxonomy of business cycles according to four attributes. This working paper is the first in a range of several papers summarizing the intermediate results of research undertaken by the author in order to reconsider and provide explanations on how modern economy creates cyclical movements.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 19616.

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Date of creation: 27 Dec 2009
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Handle: RePEc:pra:mprapa:19616

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Keywords: economic cycles; creative distraction; basic technology; innovations; endogenous economic growth.;

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References

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  1. Olivier Blanchard, 2009. "The State of Macro," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 209-228, 05.
  2. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers 8904, University of Western Ontario, Department of Economics.
  3. Louca, Francisco, 2001. "Intriguing Pendula: Founding Metaphors in the Analysis of Economic Fluctuations," Cambridge Journal of Economics, Oxford University Press, vol. 25(1), pages 25-55, January.
  4. Paul Segerstrom & Elias Dinopoulos, 1999. "A Schumpeterian Model of Protection and Relative Wages," American Economic Review, American Economic Association, vol. 89(3), pages 450-472, June.
  5. Dosi, Giovanni & Fagiolo, Giorgio & Roventini, Andrea, 2010. "Schumpeter meeting Keynes: A policy-friendly model of endogenous growth and business cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 34(9), pages 1748-1767, September.
  6. Daniel J. Wilson, 2001. "Embodying embodiment in a structural, macroeconomic input-output model," Working Paper Series 2001-18, Federal Reserve Bank of San Francisco.
  7. repec:sae:niesru:v:145:y::i:1:p:43-63 is not listed on IDEAS
  8. Richard N. Langlois, 2002. "Schumpeter and the Obsolescence of the Entrepreneur," Working papers 2002-19, University of Connecticut, Department of Economics.
  9. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
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Cited by:
  1. Haider, Adnan & Din, Musleh-ud & Ghani, Ejaz, 2012. "Monetary policy, informality and business cycle fluctuations in a developing economy vulnerable to external shocks," MPRA Paper 42484, University Library of Munich, Germany.

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