Characteristics of Business Cycles: Have they Changed?

The most recent economic downturn has shown that economic activity nowadays is still prone to large fluctuations. Despite a long tradition of research, the understanding of such fluctuations, namely business cycles, is still far from comprehensive. Moreover, in a developing world with new technologies, faster communication systems, a higher integration of world markets and increasingly better-skilled people the nature of business cycles changes continuously and new insights can be drawn from recent experience. Several issues of business cycles have been in the focus of researchers lately. First of all the understanding of business cycles requires an identification of the driving forces behind the fluctuations and the dynamics of economic activity. With the knowledge of the drivers it would be helpful for policy-makers and business managers to construct an indicator that predicts the development and that indicates the turning points of economic activity. The transmission of shocks from one economy, typically from the United States, to other economies is one aspect that has become increasingly important in a world of tightening trade and financial linkages. With the rising importance of economies such as China or India it is interesting to see if these countries could form a new regional block with a common business cycle and if the business cycle in East Asia has become in-creasingly independent from the one of the United States ...