One of the most controversial questions in macroeconomics is what explains business cycle fluctuations. Economists mostly agree on what are the key facts describing the phenomenon.
However, a unifying explanation for the facts is still debated. According to Burns and Michel (1946), business cycles are:
“ a type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprises : a cycle consists of expansions occurring at about the same time in many economic activities , followed by similarly general recessions , contractions, and revivals which merge into the expansion phase of the next cycle , this sequence of changes is recurrent but not periodic , in duration
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The following list describes the most well known and influential contributions which have survived until today:
Kondratieff cycles : The major inquiry into long- wave cycles is usually attributed to Kondratieff (1892-1930 )who ,among others ,studied British and German iron consumption and arrived at the conclusion that a cycle with a period of about 40-60 years exists .Though several approaches to explain the existence of these long waves have been proposed ,technological innovations and subsequent structural change are usually considered to be the main driving forces of this cycle . The major technological events over the last 200 years , namely the innovation of (i ) steam power (1790 ), (ii) railroads (1830 ), and (iii)industrial electrification and the automobile (1885) correspond with the three distinguished up-and downswings isolated by Kondratieff : a first complete cycle from 1790 to 1844/51 , a second cycle from 1850 to 1890/96 ,and a third one from 1890/96 to 1930
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It seemed as if stochastic exogenous influences dominated the evolution of the economy. Variables like inventory stocks temporarily respond to these shocks but eventually return to their equilibrium values. In addition to this list, several other cycles are proposed. The Kuznets cycle with a length of 15-20 years is occasionally included in the list of standard cycles .Table 1.1 summarize the properties of the three major different cycles. Type Wave length Major Topics Kondratieff 40 - 60 years technical progress, structural change Juglar 7- 11 years Investment cycle ; fluctuations in GNP, inflation rate, and employment Kitchin 2-4 years Random shocks; fluctuations in GNP, inflation rate, and employment ;inventory cycle
Table 1-1
Though this classification has become popular, it is not definitely clear whether all of these cycles really exist. For example , Kondratieff was able to isolate only three long wave cycles because reliable data on industrial production only exist for the last 100- 150 years in most industrial countries , and the periodicity of the major historical innovations can be viewed as being purely accidental
The invention of the telegraph by Morse, the discovery of new rubber working methods by Goodyear and other technological advances increased productivity and expanded the scope of possibilities. Economically, the Market Revolution saw the rise of the factory system, the Lowell system and a new important work force: foreign
The charge about the old days of the American economy—the nineteenth century, the “Gilded Age,” the era of the “robber barons”—was that it was always beset by a cycle of boom and bust. Whatever nice runs of expansion and opportunity that did come, they always seemed to be coupled with a pretty cataclysmic depression right around the corner. Boom and bust, boom and bust—this was the necessary pattern of the American economy in its primitive state. In the US, in the modern era, all this was smoothed out.
Lastly, another incredible advancement in technology and engineering was the Boston Subway finished on September 1st, 1897. This subway was the first to be made in North America and it proved to be successful. On the first day it was released over 100,000 people used the subway, a brilliant solution to traffic. All of the inventions above are still very relevant in our society now. These inventions are still in use and being used to inspire even more advanced and efficient
This book was also written during a time of great technological innovation,
Such as iron, Cronige steel mills made it to where you can make steel 96 times faster. This made a growth in demand, and made businesses bigger. Rockefeller made oil into a more refined version called kerosene. He made a lot of money selling this refined oil. There was also a change in labor.
There was an unpredicted rise in new industrial and agricultural technology that would increase productivity. In the factory, the invention of the Bessemer blast furnace and Siemens-Martin open hearth process would decrease the amount of hard labor and transform the way steel was made. While in America’s offices’s, business communication would be revolutionized with typewriters, following the use of calculators. As a result of the growing industries came an influx of new cities being developed. This expanding infrastructure started sewing back a growing number of laborers and new goods to increase supply of capital.
From the years 1900-1990, there were thousands of inventions made. All different sorts of varieties of inventions were being released, such as the automobile, which was invented in 1901 by a man named Henry Ford. Ford created the assembly line, which made it possible to create the Model T engine in only ninety-three minutes. Also, in 1901, a man named Guglielmo Marconi was the first to broadcast the first transatlantic radio signal. These inventions had an effect on the midwestern states by creating a more luxurious and extravagant lifestyle of the residents living in the midwestern states, but that does not mean that the residents of the midwestern states were living the perfect life because they weren’t.
The Great Recession started for the United States in December of 2007 and lasted until June of 2009. This was the worst recession in U.S. History since World War II. During this time, there was a 6.1 % loss in jobs, due the job shortages about 27 million people we either unemployed or underemployed. This affect the age household many people household income dropped increasing the poverty in America. In economics, a recession is a decline in economic activity affecting Gross Domestic Product or GDP for at least two consecutive quarters causing negative economic growth (Downes and Goodman).
These were the years where great inventions arise such as the cultivating and harvesting machines, which increase the agriculture productivity making the products to worth twice as much of what it did before the Gilded age. “In the post-Civil War years, major advanced in every field of science specially the chemistry
The Industrial Revolution refers to the major inventions and economic growth that happened in certain industries in the mid-eighteenth to mid-nineteenth centuries. A few important inventions that are worth noting are the spinning jenny, water frame, and steam engine. The spinning jenny was a simple, inexpensive, hand-powered machine used to sin fine, slender thread much more efficiently. Likewise, the water frame was a spinning machine that contained several hundred spindles, but rather, using water power.
Automobiles. Telephones. Lightbulbs. These were some of the major technological innovations created during 1865 to 1920. These creations impacted many Americans, even to this day.
World History 1600-1650 The world has been in a huge number of wars. Wars could be deadly. Between the years of 1600-1650 , there were a lot of wars, religious conflicts and science developments. One of the most famous wars in this time was the war which started in 1600 and lasted around 30 years and it´s called ¨The Thirty Years War¨. The thirty years war was a series of brutal , bloody , and a very deadly wars that took place mostly in Central Europe and it is seen as one of longest and most destructive conflicts in European history.
In addition, iron and steam fuelled transportation and built massive industries along side the energy
Silicon Valley and the Fifth Kondratiev Cycle The Fifth Kondratiev cycle has been taking place since 1970 to present day. This cycle has shown times of incredible change and how technological networks have changed societies: New professions, industries have been replaced by new ones and long periods of long-term economic growth has resulted. The Fifth Kondratiev cycle shows inventions in the information technology and communications technology sectors. It is clear the areas of application are information and communication.
Long term economic developments may be identified with expansion, as inflations may increase. Inflations usually increase the cost of products on sale, and as the costs are higher, it will be an issue to the nationality in question to be able to buy their needs There is a limited amount of time involved in the growth of an economy as it involves an increase in GDP. The hypothesis and practice are both diverse. The hypothesis is the thing that economists are able to figure out for themselves; however, to be able to use the hypothesis in reality is the main task. Utilization of the hypothesis is something that really happens at some point.