Has the Business Cycle Been Abolished?

Victor Zarnowitz

No 6367, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Long business expansions have repeatedly generated expectations of self- perpetuating prosperity, yet it is clear that such popular forecasts always proved wrong eventually. Few business cycle peaks are successfully predicted; indeed, most are publicly recognized only with lengty delays. Analysts have been prompter to recognize troughs than peaks, even though the latter have often followed major slowdowns and have much longer (but also more variable variable) leadtimes of the indicators. Oil price boosts and monetary policy shifts triggered some recent cyclical downturns, but even in these particular episodes other more regularly observed developments played major roles. THe insistence on single shocks as the causes of recessions is erroneous: the older emphasis on movements in the growth of demand, money and credit, profits and investment deserve a revival. The relatively new but now widely held belief is that, for the recession-free stability to reign, real growth must be no more than moderate and inflation must stay quiescent but financial asset prices can rise indefinitely. The risk of overheating alone is being emphasized but downside as well as upside risks exist and both need to be continually considered."

JEL-codes: E32 E37 (search for similar items in EconPapers)
Date: 1999-04
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as Business Economics, vol. 33, no. 4, October 1998. pp. 39-45

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