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Are business cycles inevitable?


  • Kwasnicki, Witold


The simulation model of business cycles emergence is proposed. In the first section a preliminary model of well known hog’s cycle is presented. The hog’s cycle is used as a metaphor for more general model of business cycles, which is presented in the second section. Emergence of fluctuations requires a tuning of numerous factors (the investment and price delays, the growth rate of the market, the capital productivity growth rate, capital depreciation rate, elasticity of demand). It turns out that the greater the market growth rate and the more elastic (competitive) market the more probably is that the fluctuations are damped. We may venture to propose a kind of recipe to avoid (or at least to delimit) economic fluctuations: we ought to create friendly regulatory conditions for entrepreneurs to ensure highest potential long term growth rate and to minimize investment delays.

Suggested Citation

  • Kwasnicki, Witold, 2008. "Are business cycles inevitable?," MPRA Paper 17295, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:17295

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    References listed on IDEAS

    1. Goulven Rubin, 2005. "La controverse entre Clower et Patinkin au sujet de la validité de la loi de Walras," Revue économique, Presses de Sciences-Po, vol. 56(1), pages 5-24.
    2. Mill, John Stuart, 1874. "Essays on Some Unsettled Questions of Political Economy," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 2, number mill1874.
    3. van den Hauwe, Ludwig, 2006. "The Uneasy Case for Fractional-Reserve Free Banking," MPRA Paper 120, University Library of Munich, Germany.
    4. Glasner,David, 1989. "Free Banking and Monetary Reform," Cambridge Books, Cambridge University Press, number 9780521361750, May.
    5. David E. Laidler, 1988. "Taking Money Seriously," Canadian Journal of Economics, Canadian Economics Association, vol. 21(4), pages 687-713, November.
    6. Say, Jean-Baptiste, 1880. "A Treatise on Political Economy; or the Production, Distribution, and Consumption of Wealth," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 4, number say1880.
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    More about this item


    business cycles; model; computer simulation;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles


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