Tag Archives: business cycle

I have been reporting for months that the indicator we should all be monitoring is Real Gross Private Domestic Investment.... Forbes — Pragmatic EconomicsIs Falling Investment Spending The Last Nail In The Coffin? John T. Harvey | Professor of Economics, Texas Christian University

I saw a high profile comment to the effect that the business cycle was abolished recently. Since I will be plugging a book on recessions shortly, that represents a risk to my business plans. I do not wish to go through what exactly was said elsewhere (mainly because I did not go through the details of the argument), but just give my spin on the idea. If we stick enough qualifications into how we express ourselves, it is not that controversial an opinion.... Bond Economics End Of...

Now that new home sales have reached a new cycle high (in June), I'd like to update a couple of graphs in a previous post (most of this from an earlier post). For the economy, what we should be focused on are single family starts and new home sales. As I noted in Investment and Recessions "New Home Sales appears to be an excellent leading indicator, and currently new home sales (and housing starts) are up solidly year-over-year, and this suggests there is no recession in sight."… Although...

Inventories are one driver of the business cycle. A common argument is that the movement towards just-in-time inventories has reduced the inventory cycle, and hence reduced the amplitude of the business cycle. Although plausible, it is very difficult to distinguish this from a lessened amplitude of the business cycle causing less swings in inventories. Since inventory growth is part of investment, one could view it as a subset of the argument that investment trends drive the business cycle...

The focus of my upcoming book is on recession forecasting, and not policy responses towards recessions. However, I expect that this is a subject of interest to many of my readers, so I will offer a brief outline of some of the literature. (Note: this is an unedited first draft of a section from my manuscript book on recessions. For a typical standalone article, it is too long. However, I do not want to spend time stripping out information that should appear in a book. I could have split it...

Real estate -- particularly residential real estate -- is an extremely important factor when discussing recessions in the modern era. To a certain extent, real estate is where economic theory goes to die. One possibility is that the theory was largely developed when the norms in real estate investment were conservative, so attention was moved to the industrial sector. However, the herd tendencies in the housing market may now overwhelm the industrial cycle. (This article is a set of notes...

The period of low demand and low interest rates during the Great Recession has prompted economists to consider new policies to stabilise the business cycle. The ‘zero lower bound’ on nominal interest rates prevented the use of interest rate reductions to stimulate consumption and investment in many developed economies. Researchers have proposed an alternative policy tool, ‘unconventional’ fiscal policy. This is a commitment to raise consumption taxes in the future (Feldstein 2002, Hall...

Hyman Minsky quote.Lars P. Syll’s BlogWhat is missing in Keynes’ General Theory Lars P. Syll | Professor, Malmo University

The ‘Matching functions’ mentioined in the quote explain unemployment by assuming that finding a job or a worker takes time. And this does explain unemployment – part of it (2%-point?). The rest must be explained by crises and the inability of the market system to create jobs. As is clear from comparing graph 2, short-lived crises cause lower levels of job creation and higher levels of job destruction. Basically, these swings are not even that large. But together they lead to a fast...

I am resuming work on pondering the business cycle, and just wanted to give some initial comments about the notion of productivity. This article just describes some basic concepts taken from a generic post-Keynesian perspective (plus some of my own views, which may or may not be eccentric). As work progresses on my book, I should address the neo-classical approach, as well as empirical results. Bond EconomicsProductivity And The CycleBrian Romanchuk