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Business cycles are intervals of general expansion followed by recession in economic performance. The changes in economic activity that characterize business cycles have important implications for the welfare of the general population, government institutions, and private sector firms. There are many definitions of a business cycle.
The slowdown in economic activity led to the recession of 1953, bringing an end to nearly four years of expansion. May 1954– Aug 1957 39 +2.5% +4.0%: Expansion resumed following a return to growth in May 1954. Employment and GDP growth slowed relative to the previous two expansions. April 1958– April 1960 24 +3.6% +5.6%
Real business-cycle theory (RBC theory) is a class of new classical macroeconomics models in which business-cycle fluctuations are accounted for by real (in contrast to nominal) shocks. [1]
In macroeconomics, the cost of business cycles is the decrease in social welfare, if any, caused by business cycle fluctuations.. Nobel economist Robert Lucas proposed measuring the cost of business cycles as the percentage increase in consumption that would be necessary to make a representative consumer indifferent between a smooth, non-fluctuating, consumption trend and one that is subject ...
Debt deflation is a theory of economic cycles which holds that recessions and depressions are due to the overall level of debt shrinking (deflating). Hence, the credit cycle is the cause of the economic cycle. The theory was developed by Irving Fisher following the Wall Street Crash of 1929 and the ensuing Great Depression.
Short-run variation in economic growth is termed the business cycle. Generally, according to economists, the ups and downs in the business cycle can be attributed to fluctuations in aggregate demand. In contrast, economic growth is concerned with the long-run trend in production due to structural causes such as technological growth and factor ...
According to BCA Research strategist Peter Berezin, a recession in 2025 will spark a 26% decline in the S&P 500. Berezin expects global economic growth to slow sharply next year, in part driven by ...
Early real business-cycle models postulated an economy populated by a representative consumer who operates in perfectly competitive markets. The only sources of uncertainty in these models are "shocks" in technology. [2] RBC theory builds on the neoclassical growth model, under the assumption of flexible prices, to study how real shocks to the ...
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