Business cycles: concept and phases, causes of cyclical fluctuations, types of cycles, features of the mechanism and forms of the cycle in modern conditions. Business cycle: causes, phases and types Mechanism of business cycles

The question of the causes of the cyclical phenomenon in the economy is interpreted ambiguously by various economic schools.

Marx, who studied cyclicality during the period of classical capitalism, saw the reasons for this phenomenon in the internal nature of capitalism and in the special external forms of manifestation of its main economic contradiction - the contradiction between the social nature of production and the private appropriation of its results.

Labor power under capitalism was considered by Marx as a commodity that is bought and sold by capitalists for the sake of its exploitation, i.e. for its specific ability to create surplus value appropriated by capitalists. Under the influence of competition, capitalists are forced to replace labor with machines, and this reduces the rate of profit, i.e. the share of surplus value in the total amount of capital. To maintain the rate of profit, capitalists strive to increase the degree of exploitation of workers, holding back the growth of wages. On a societal scale, this leads to a lag between consumption (in the form of effective demand) and production capabilities. As a result, crises of overproduction arise as a consequence of the population's lack of funds to purchase manufactured goods.

Non-Marxist schools have developed a number of different interpretations of the causes of cycles and crises in the economy. Samuelson, for example, notes the following as the most famous theories of cycles and crises: monetary theory, which explains the cycle by the expansion and contraction of bank credit (Hawtrey et al.); the theory of innovation, which explains the cycle by the use of important innovations in production, such as railways (Schumpeter, Hansen); a psychological theory that interprets the cycle as a consequence of waves of pessimistic and optimistic mood sweeping the population (Pigou, Bagehot, etc.); the theory of underconsumption, which sees the cause of the cycle in too large a share of income going to rich and thrifty people, compared to what can be invested (Hobson, Foster, Catchings, etc.); the theory of overinvestment, whose proponents believe that the cause of a recession is excessive rather than underinvestment (Hayek, Mises, etc.); “sunspot-weather-crop theory” (Jevons, Moore, etc.).

In recent decades, the most popular explanations for cycles are the action of the animation-acceleration mechanism, as well as the so-called pro-cyclical government policy.

The concept of a multiplier was first formulated by the English economist R. Kahn during the global economic crisis of 1929–1933. Kahn called the multiplier the coefficient that determines the increase in employment for each unit of government spending aimed at public works. Keynes developed this idea of the employment multiplier from Kahn and used it when considering the role of investment in the economy. At the same time, Keynes distinguished autonomous investments I a, changes in the volumes of which do not depend on changes in the level of income, but are determined by certain factors external to the economy, for example, uneven development of scientific and technical progress, and derivative investments I in, the volumes of which are directly determined by fluctuations in levels of economic activity .

Keynes proved that there is a stable relationship between changes in autonomous investment and national income, namely, changes in the volume of these investments cause greater changes in the volume of national income than changes in the volume of investment themselves.

As is known, one of the expressions of the equilibrium situation in the economy is equality

where Y is income; C - consumption; I - investment.

This equality can be represented in the form

Y = C Y Y + I a ,

where C Y is the marginal propensity to consume; I a - autonomous investments.

In this case, autonomous investment will be defined as the difference between total income and its consumed part:

I a = Y – C Y Y, or I a = Y (1 – C Y).

From here, income will be determined by the formula

Y = I a / (1 – C Y).

If we express this equation in incremental quantities, it will take the following form:

DY = DI a 1 / (1 – C Y).

In this formula, 1 / (1 – C Y) will represent the income multiplier K, i.e. coefficient that shows how much national income will increase with an increase in autonomous investment by DI a. (Similarly, in the case of a reduction in investment, the multiplier will show how much income will decrease compared to investment.)

Since C Y = 1 – S Y , where S Y is the marginal propensity to save, the multiplier in question can also be expressed as 1 / S Y .

The multiplier coefficient, as can be seen from the formula, directly depends on C Y, i.e. the population's propensity to consume. The greater this propensity, the greater the multiplier, and vice versa. For example, if the propensity to consume is equal to 1/2, then the national income multiplier will be equal to 2, and if the population consumes 3/4 of the national income, then the multiplier will double. Accordingly, with the same volume of investment increment, the economy may have different increments in national income due to differences in the population’s propensities to consume and multiplier coefficients. For example, an increase in investment by 400 billion rubles. with a multiplier coefficient of 2, it will increase national income in the amount of only 800 billion rubles, and with K = 4 - in the amount of 1600 billion rubles.

Keynes explained the multiple increase in income due to an increase in investment by the emergence, following the primary increase in income generated by the initial investments, of secondary, tertiary and subsequent increases in income for various individuals. For example, due to the investment of additional funds in construction, the income of construction workers increases. These workers (depending on their propensity to consume) will spend part of this income on the purchase of any consumer goods and thereby increase (by the amount of the cost of these goods) the income of the sellers of the corresponding stores. In accordance with their propensity to consume, these sellers will also partially spend their additional income on the purchase of various goods, thereby giving an increase in income to the sellers of these goods. The increase in income will occur in an infinitely decreasing geometric progression, because Each time, not all income is spent, but only a part of it, determined by the propensity to consume. The effect of the multiplier effect decreases to zero when the ratio of the increase in total expenditures to the initial volume of additional investments becomes equal to the multiplier coefficient.

The multiplier effect in the economy itself, revealed by Keynes, is not considered decisive in the formation of the cycle. However, this effect becomes very important when it interacts with the accelerator effect.

Unlike the multiplier, the accelerator effect is no longer associated with autonomous, but with derivative investments, i.e. with those that depend on changes in income levels.

The principle of the accelerator is that an increase in income causes an increase in investment proportional to the increase in income (accordingly, a decrease in investment generates a reverse reaction). The general formula of the accelerator V is as follows:

V = DI / (Y t – Y t– 1),

where DI is the increase in investment; (Y t – Y t – 1) - increase in income for the period under review.

In accordance with this formula, the increase in investment can be presented as follows:

DI = V (Y t – Y t – 1).

The point of the accelerator is that the increase in investments can be more dramatic than the increase in income that caused it.

The reason for sharper fluctuations in investment compared to income (or, in other words, investment demand compared to consumer demand) is usually considered to be the need to spend part of the investment to compensate for the depreciation of fixed capital. Due to this circumstance, an increase in demand for finished products, for example, by 10% can cause an increase in gross investment by a double percentage.

Although the multiplier and accelerator models are considered separately, their mechanisms are believed to operate in close connection with each other. As soon as one of these mechanisms comes into effect, the second one begins to function. If, for example, in an equilibrium position an autonomous change in investment occurs, then the multiplier comes into motion, which causes a number of changes in income. But changes in income set the accelerator in motion and generate changes in the volume of derivative investments. Changes in derivative investments again trigger the multiplier mechanism, which generates changes in income, etc.

The described scheme of interaction between the multiplier and the accelerator constitutes the acceleration-animation mechanism of the cycle.

The general model of interaction between the multiplier and the accelerator is characterized by the following income formula by J.R. Hicks:

Y t = (1 – S) Y t – 1 + V (Y t – 1 – Y t – 2) + A t,

where Y t is national income; S is the share of savings in national income; (1 – S) - the share of consumption in it (or the propensity to consume); V - accelerator coefficient; A t - autonomous demand.

When using the animation-acceleration mechanism of a cycle, the initial factor in the cycle is considered to be various external impulses that activate this mechanism. At the same time, specific barriers (limits) in the economy are identified, which are objective obstacles to the increase (reduction) of certain economic values. For example, the level of employment objectively acts as a kind of physical barrier, which growth in real income cannot “overstep.” Hitting the full employment ceiling, real income growth stops even as demand continues to rise. But if real income cannot increase, then derivative investments are reduced to zero, because their level depends not on the volume of income, but on its growth. Hence, there is inevitably a fall in overall demand and income, which causes a cumulative decline in the economy as a whole.

The cumulative process of decline, according to this point of view, also cannot continue indefinitely. The barrier for him is the amount of worn-out capital, i.e. the volume of negative investments, which cannot exceed the amount of this capital. As soon as negative net investments in the process of falling reach this limiting value for them, their volume no longer changes, and as a result, the reduction in income begins to slow down. But if negative income slows down, then negative net investment also decreases, leading to higher income. An increase in income, in turn, will lead to an increase in capital derivatives and, therefore, to an aggregate increase in demand and income.

The state can act as a generator of the business cycle. The study of the role of the state in identifying the causes of crises and cycles at the present stage is primarily associated with the theories of the equilibrium business cycle and the political business cycle.

The theory of equilibrium business cycle is associated primarily with the ideas of monetarists. According to these ideas, states in many Western countries in the post-war period act as unique generators of monetary “shocks” that bring the economic system out of equilibrium, and thus support cyclical fluctuations in the economy. If the government, pursuing an expansionist policy, increases the growth rate of the amount of money in circulation, then after a certain (several months) delay the growth rate of nominal GNP begins to accelerate, approximately corresponding to the growth of the money supply. In this case, at first, almost all of the acceleration in nominal GNP growth will represent an increase in real output, accompanied by a decrease in unemployment. As the expansion phase continues, an increase in GNP will simply mean an increase in the absolute price level. If the growth rate of the money supply in circulation slows down, then the corresponding reactions of nominal and real GNP, as well as the absolute price level, change places. M. Friedman and A. Schwartz proved the possibility of money influencing the development of the business cycle by studying the dynamics of money circulation in the United States for the period 1867–1960.

In the 1970s–1980s. The point of view that the state itself is often a generator of cyclical phenomena in the economy began to be actively developed by representatives of such a direction as the theory of rational expectations.

Economists who adhere to this school of thought believe that entrepreneurs and the population, thanks to the ongoing information revolution, have so learned to evaluate and recognize the true motives of certain economic decisions of government bodies that they can always respond to government decisions in a timely manner in accordance with their own benefit. As a result, the goals of government policy may remain unrealized, but the phenomena of economic recession or recovery caused by certain government actions take on a more pronounced character, so that even small (initially) differences in the level of economic activity can turn into cyclical ones. Let's assume that the economy is trending downward. The state, trying to overcome it, lowers the tax on capital investments, namely, provides, for example, entrepreneurs with a discount that allows them not to pay tax on 10% of their investment expenses. Such a measure will certainly lead to an increase in investment spending, which will stimulate demand and thereby prevent a recession in the economy. Such a chain of events will serve as proof for government agencies that fiscal policy is a good tool for smoothing out cyclicality. But if, when the next recession occurs, at least some entrepreneurs decide that they should not rush to invest until the government reduces taxes, then the result will be a temporary deferral of investment.

Postponing investment will first lead to an intensification of the already emerging decline, and then, when the state actually reduces the tax, to a stronger than usual flow of investment. As a result, the state, with its countercyclical policy, will strengthen both the recession and recovery phases in the economy, i.e. will aggravate rather than alleviate cyclical fluctuations.

The theory of the political business cycle is based on the following basic premises. Firstly, it is assumed that the relationship between unemployment and inflation levels is determined according to the Phillips curve type, i.e. there is an inverse relationship between these values: the lower the unemployment, the faster prices rise (it is assumed that price changes depend not only on the current level of employment, but also on past values, i.e. that inflation has a certain inertia). Secondly, the premise is accepted that the economic situation within the country significantly affects the popularity of the ruling party. The main economic indicators to which the population reacts are the inflation rate and the unemployment rate, and it is believed that the lower their level, the, other things being equal, the more votes will be cast in the upcoming elections for the ruling party (or president). Thirdly, the main goal of the ruling party’s internal economic policy is to ensure victory in the next parliamentary (presidential) elections.

Based on these three premises, the general scheme of the political business cycle is characterized. Its meaning boils down to the following. The government, in an effort to ensure the victory of its party in the elections, takes measures to create and maintain a combination of inflation and unemployment levels that seem most acceptable to voters. To this end, the administration, immediately after coming to power, makes efforts to reduce the rate of price growth by artificially provoking crisis phenomena, and by the end of its period of rule it begins to solve the opposite problem, i.e. is doing everything possible to “heat up” the economy and raise the level of employment. Increased employment, of course, can cause prices to rise. But the calculation is made on the inertia of their movement. By the time of the elections, the employment level rises, which causes approval among voters, and inflation (an inevitable subsequent negative factor) has not yet had time to gain full strength. As a result, when implemented correctly, such policies can help attract additional votes and achieve electoral success.

Introduction

The cyclical nature of the Russian economy, its susceptibility to alternating recessions and recoveries, is still poorly understood, although the recent crisis has generated a flurry of publications touching on various aspects of the crisis phenomena that Russia has experienced. These publications, however, are largely journalistic in nature and do not yet allow us to form a holistic understanding of the nature of the crisis unfolding in the global economy, its driving forces and possible consequences, as well as the mechanism for overcoming the crisis and the degree of influence of these processes on the Russian economy. The risks that the Russian economy faces on the world stage have not been fully identified, their scale has not been assessed, and possible actions to prevent potential threats have not been fully calculated. In addition, methodological tools have not yet been developed to adequately take into account the influence of global economic cycles when forecasting the main parameters of the Russian economy.

The object of the study is the economic cycles of the Russian economy.

The main goal of this work is to understand the role of cyclical factors in the dynamics of the main parameters of the Russian economy. This goal was achieved by solving several interrelated tasks, in particular:

1. study the theoretical material of business cycles: duration, amplitude and varieties;

2. analyze business cycles: duration, amplitude and varieties.

In the process of work, a statistical, graphical and econometric analysis of detailed information contained in Rosstat databases, as well as in the most authoritative academic studies, was carried out.

Theoretical and methodological aspects of business cycles: duration, amplitude and varieties

The second half of the 2000s was marked by the global financial crisis, which made many economists think about its causes. Some authors named the main reason for this decline as an economic bubble - the “inflating” of the market with a large number of securities, including derivatives, sold at a price significantly higher than their real value. Not a single economic school has put forward sufficiently substantiated hypotheses, assumptions about the properties, problems of economic bubbles and ways to combat them.

The economic (or business) cycle is the period of time between two identical states of economic conditions.

According to A.I. Popov, the economic cycle is the ups and downs of economic activity levels that are repeated over a number of years, varying in duration and intensity with a long-term trend towards economic growth.

Frolova T.A. writes in his book “Macroeconomics: Lecture Notes” [p. 105, 3], that the economic cycle is periodic fluctuations in levels of employment, production and inflation.

Vechkanov G.S. and Vechkanova G.R. claim [p. 248, 2], that in the classical sense the economic cycle includes four phases:

1. Crisis (downturn, recession);

2. Depression (stagnation);

4. Rise (boom, peak).

Shchetinin A. And formulated the following definitions [p. 256, 6].

The recession phase (crisis) represents a noticeable imbalance in social production. During this phase, production volumes are reduced along with unemployment, which inevitably leads to a reduction in demand. Wages and incomes of enterprises are decreasing, but, due to the great need of producers for money to cover loans, the interest rate on loans is increasing sharply. If the sale of goods becomes more difficult, prices begin to decline, but this phenomenon is not necessary. Prices for goods and services often rise. This phenomenon is especially characteristic of countries with economies in transition.

5. The depression phase is a phase of stagnation. It begins when the economy reaches critical points of decline and sinks to the “bottom.” Production does not grow, but it no longer decreases in volume; it is in this phase that the most unloaded production is achieved, and unemployment reaches its maximum. The number of bankruptcies reaches the highest level. At this phase of social production, fixed capital is renewed. Entrepreneurs are trying to adapt to low prices and reduced demand, looking for opportunities to carry out production and, under such conditions, make a profit. And this can be achieved, as a rule, through the use of new equipment and new technologies, and progressive organization of labor.

6. The recovery phase begins with a slight increase in production and a corresponding reduction in unemployment. Household incomes and entrepreneurs' incomes begin to grow. The demand for consumer goods and resources is increasing, and at the same time prices are rising. Unemployment is gradually decreasing.

7. The recovery phase begins when production has already reached pre-crisis levels. At this stage of development, production capacity is rapidly increasing, the scale of production is growing, and unemployment is sharply decreasing. The incomes of the population and the profits of entrepreneurs are increasing noticeably. Growing aggregate demand creates the preconditions for the next cycle if there is a noticeable reduction in aggregate demand.

Along with the considered four-phase cycle in the economic literature, the cycle is often characterized by its two-phase structure. In this case, a recession phase and a growth phase are distinguished. The points that graphically display the peaks of growth or the low level of decline are called maximum and minimum points, respectively.

We display two- and four-phase approaches to the cycle in Fig. 1.1 and fig. 1.2

Rice. 1.1

Rice. 1.2

Since the impact of business cycles on the economy is quite large and widespread, and business downturns can lead to very serious consequences, economists are trying to determine the reasons for their occurrence.

Frolova T.A. notes [p. 107, 3], that the reasons for cyclicality are: periodic depletion of autonomous investments, weakening of the multiplier effect, fluctuations in the volume of money supply, renewal of basic capital goods, etc.

The causes of cycles are divided into external (exogenous) and internal (endogenous).

External reasons include: natural features - the 11-year cycle of solar activity; exacerbation and weakening of the class struggle; world wars; mass migration of people caused either by the opening of new spaces or by overpopulation; great scientific discoveries; psychological factors (for example, the “crowd” effect - everyone either intensively organizes a business, expands production, invests savings, or panics and sharply reduces entrepreneurial activity).

Internal causes of cycles:

1. Accelerator effect. The increase in demand for consumer goods causes a significant increase in production (the expansion and emergence of new enterprises for the production of cars, televisions, the construction industry, etc.). In this case, there is a temporary delay of producers to changes in consumer demand. The demand for consumer goods has already been satisfied, and industry continues to produce (the “heated furnace” effect). Large-scale production cannot immediately respond to changes in demand. The accelerator (V) is expressed by a coefficient.

2. Disproportions in the structure of the national economy. The natural aging of some industries, the development of new industries, the peculiarities of production development by region - all this causes imbalances between supply and demand for the range of goods.

3. The impact of scientific and technological progress on the renewal of active fixed capital, scientific and technological progress leads to obsolescence of technological equipment, and the actual replacement of equipment is delayed.

4. “Underconsumption” of the population, causing demand to lag behind supply due to increased savings. The underlying reason lies in the uneven distribution of income.

5. Government mistakes in state fiscal policy, failures in the monetary economy or banking sector. In reality, all these reasons can be reduced to one. The main cause of economic cycles is the discrepancy between aggregate demand and aggregate supply, between aggregate expenditures and aggregate production volume.

Zaritsky A.V. notes [p. 133, 5 ] that the main types of cycles are:

1. Industrial or business cycle, lasting 7 - 12 years. Fluctuations are based on the periodicity of the investment process, which initiates fluctuations in GDP, prices, and employment.

2. Kitchin cycles or inventory cycles, lasting 2-4 years. Fluctuations are based on changes in inventory levels.

3. “Construction cycles” or Blacksmith cycles (20 - 25 years). Associated with the period of renovation of buildings, structures, fixed assets and housing.

4. Long-term fluctuations (Kondratiev cycles) - a theoretical long-term cycle in which the movement from boom to boom to recession takes 30 -50 years and on which economic cycles with a shorter period are superimposed. Explanations for these long waves of economic activity usually rely on the idea that major technological innovations (such as the invention of the automobile) spark economic activity for decades to come before their impact fades.

5. Fluctuations in the demographic environment. Democratic pits, etc.

In the temporal aspect, under the influence of the famous systematizers J. Schumpeter and E. Hansen, three types of cycles are distinguished in the economic literature: short-term Kitchin cycles (2-4 years), medium-term Juglar cycles (8-10 years), long waves of the N.D. market. Kondratieva (50 years or more) [256 p., 4]

Let us also note the methodological basis of N.D.’s hypothesis. Kondratiev, who was the first economist to make an attempt to substantiate the long waves of the market based on the study of technical and economic factors - the dynamics of commodity prices, interest rates, nominal wages, foreign trade turnover, coal production and consumption, cast iron and lead production. He identified 2.5 cycles over 140 years [178 p., 1]: The first cycle. Upward wave - from 1787-1792. from 1810-1817; downward wave - from 1810-1817. to 1844-1851 Second cycle. Upward wave - from 1844-1851. from 1870-1875; downward wave - from 1870-1875. to 1890-1896 Third cycle. Upward wave - from 1890-1896. to 1914-1920

Zaritsky A.V. notes [p. 135, 5], that economic cycles are characterized by the following important indicators:

1. amplitude of oscillations - the maximum difference between the largest and smallest value of the indicator during the cycle (Fig. 1.3, distance CD);

2. cycle duration - the period of time during which one complete fluctuation in business activity occurs (Fig. 1.3, distance AB).

1. short cycles associated with the restoration of economic equilibrium in the consumer market, with fluctuations in wholesale prices and changes in firms' inventories. Their duration is 2-4 years;

2. medium cycles associated with changes in the investment demand of enterprises, with the long-term accumulation of production factors and improvement of technologies. Their duration is 10-15 years;

3. long cycles (waves) associated with discoveries or important technical innovations and their spread. Their duration is 40-60 years.

2. Analysis of economic cycles: duration, amplitude and varieties

Economic growth and business cycles (business cycles) are one of the most pressing and intensively developed problems of economic theory and practice at present.

Based on available data from the “Appendix to the Russian Statistical Yearbook 2014”, we will construct a graph “Economic cycles”.

Table 1 - Primary and calculated indicators of the “Economic cycle”

Gross domestic product, billion rubles (1992-1997 - trillion rubles) at current prices	Consumer price indices for goods and services1) for the Russian Federation in 1991-2015.	Gross domestic product, billion rubles (1992-1997 - trillion rubles) - real in comparable prices	GDP growth rate

Let's build the "Economic Cycle" using Microsoft Excel 2010.

The “economic cycle” is presented in Figure 2.1

Rice. 2.1

According to the data obtained, we can say that in 2008 - 2011 there is a “crisis”.

The main indicator of the cycle phases is the rate of economic growth or growth (rate of growth - g), which is expressed as a percentage and calculated using the formulas:

G = Yt / Yt-1*100%,

g = [(Yt - Yt-1) / Yt-1]*100%= 100% - g,

where G is the rate of economic growth, g is the rate of economic growth, Yt is the real GDP of the current year, Yt-1 is the real GDP of the previous year. This indicator characterizes the percentage change in real GDP (total output) in each subsequent year compared to the previous one, i.e. in fact, not the growth rate, but the GDP growth rate. If this value is positive, then the economy is in a boom phase, and if it is negative, then it is in a recession phase. This indicator is calculated for one year and characterizes the rate of economic development, i.e. short-term (annual) fluctuations in actual GDP.

According to the calculation carried out in Table 1 “Primary and estimated indicators of the “Economic cycle””, a negative rate of economic growth is observed in 2009, which confirms the graph we obtained (Fig. 2.1).

The period we are analyzing can be divided into the following phases of the economic cycle. The following results were obtained. A four-phase approach was used.

· 2005 - “Boom” phase;

· 2009 - “Crisis” phase;

The data obtained can be explained as follows. After the events of 2000-2006. Budget revenues from oil production and exports increased significantly due to the steady increase in world oil prices. According to government experts, it was expected that 2008 would be the year the transition period ended. The economy demonstrated high growth rates, Russia's gold and foreign exchange reserves increased significantly, the country's external public debt was reduced to an unprecedented low level, and sovereign funds reached astronomical values. It seemed that the Russian economy had developed greatly and was inaccessible to global crises. However, the global crisis affected Russia at the end of the summer of 2008, and the channel for penetration of the global crisis into the domestic economy turned out to be “oil and gas pipes,” and internal factors only aggravated the course and manifestations of this crisis. Due to decreased demand for oil (and then gas and metals) and a four-fold drop in world oil prices, the Russian economy received a severe blow. Thus, there were no internal reasons for the current economic crisis in Russia, and there is no need to talk about overproduction of industrial capital in our economy yet.

Crisis of 2008-2011 shows that Russia has finally turned into a country of peripheral dependent capitalism, despite a number of remaining signs of a great power. For this reason, the anti-crisis measures of the Russian government are similar to the monetary methods used in developed countries, which, in turn, hides the true nature of our crisis, making it similar to the “Western”.

It is not possible to say the duration of the economic cycle based on our data, since the economic cycle is currently ongoing.

The amplitude is 55,484.03 (38648.76 + 16835.27).

Let's compare the data obtained with Russian scientists working on issues in this area.

Tyapkina M. F. (Candidate of Economic Sciences, Associate Professor of the Department of Finance and Analysis) identifies the following phases:

· 2000 - 2001, 2006 - 2008, 2013 - “Recession” phase;

· 2002, 2009 - “Revival” phase;

· 2003 - 2004 , 2010 - 2011 - “Growth” phase;

· 2005, 2012 - “Boom” phase.

Tyapkina M.F. and I only agreed on the “Boom” phase (2005).

Grachev G.A. (PhD in Physics and Mathematics, Leading Researcher at the Research Institute of Physics) outlined the following time periods for the phases of the economic cycle:

· 1998 - 2005 - “Growth” phase;

· 2005 - “Boom” phase;

· 2006 - 2008 - “Recession” phase;

· 2009 - “Crisis” phase;

· 2010 - 2015 - “Growth” phase.

The graph of the “Business Cycle”, which was displayed by G. A. Grachev, is presented in Fig. 2.2.

Rice. 2.2

Almost all phases of the economic cycle coincided with G. A. Grachev.

Conclusion

economic business cycle

In accordance with the goals set at the beginning of the work, we will summarize the results of the test work.

The economy does not develop along a straight line (trend) of economic growth, but through constant deviations from the trend, through recessions and ascents. The economy develops cyclically, experiencing periodic downturns and upswings in the economy, fluctuations in business activity.

Economic cycle - fluctuations in business activity, periodic downturns and upswings in the economy.

The economic cycle includes four phases:

1. Crisis (downturn, recession);

2. Depression (stagnation);

3. Revival (expansion) or recovery phase;

4. Rise (boom, peak).

Economic literature distinguishes three types of cycles: short-term Kitchin cycles (2-4 years), medium-term Zhuglyar cycles (8-10 years), long waves of market conditions N.D. Kondratieva (50 years or more).

In the course of our study of this topic, an analysis of economic cycles was carried out. An attempt was made to identify the phase of the economic cycle. The following results were obtained. A four-phase approach was used.

· 2000-2004 - “Rise” phase

· 2005 - “Boom” phase;

· 2006-2008 - “Recession” phase;

· 2009 - “Crisis” phase;

· 2010 - 2013 - - “Rise” phase.

Bibliography

1. Kondratyev N.D. Problems of economic dynamics. - M., 1989. - 412 p.

2. Macroeconomics. G. S. Vechkanov, G. R. Vechkanova. St. Petersburg: Peter, 2006. - 544 pp..

3. Frolova T. A., Economic theory: lecture notes. Tagonrog: TTI SFU, 2011

4. Economics: Textbook / Ed. A.S. Bulatova. - M., 2005. - 734 p.

5. Economic theory. A. E. Zaretsky. St. Petersburg: Sova, 2011. - 160 p.

The development of social production, which depends on many factors, is not uniform and continuous. In some periods, the growth of total production occurs very quickly, in other years it is slower, and sometimes there is even a decline. Thus, the economic development of countries does not occur evenly, i.e. it is characterized by macroeconomic instability, which manifests itself in unemployment and inflation in the form of cyclical development. The latter presupposes a unified process of economic development in which phases of crises and booms naturally alternate. Moreover, the general oscillatory movement of business activity consists of several components with different periods and mechanisms of oscillation. This process takes place around the equilibrium position, which is considered the normal state of the economy. Therefore, a cycle can be called wave-like oscillations of various durations around an equilibrium position. Or, in other words, the business cycle is the period of time between two identical trends in economic activity over several years.

Individual economic cycles differ from each other in duration and intensity, but they all have the same phases: crisis (recession), depression (stagnation, low point of decline), recovery (rise, expansion), peak (boom, top of the cycle) .

The main phases of the cycle are crisis and rise and their corresponding points - the maximum decline as the lowest point and the peak - the top of the rise.

A crisis characterized by a sharp reduction in business activity - there is an excess of goods compared to the demand for them from consumers, which leads to lower prices. Since the created goods do not find sales, commodity producers curtail production, the number of unemployed increases sharply, and household incomes decrease, which causes a further reduction in demand. As a result, many entrepreneurs become insolvent and fail. The crisis is intensified by the loss of trust of market economy subjects in each other and shocks to the credit system.

What is distinctive is the crisis that took place in England in 1825. Then it erupted again in England and engulfed the United States (1836). The world crisis first occurred in 1857. Later, such crises began to recur at intervals of 8–10 years. The crises of 1900–1903 and 1929–1933 were characterized by the greatest destructiveness. Crisis of 1929–1933 began with the stock market crash on Black Tuesday, October 29, 1929. Output in countries affected by the economic downturn fell by 44%. World trade turnover fell by 61%. The number of unemployed people reached 40 million (every fourth person was unemployed). After the Second World War, the economies of developed countries experienced recessions in 1948–1949, 1953–1954, 1960–1961, 1980–1984.

The crisis follows depression, which can be long-lasting. During this phase, production and employment, having reached their lowest levels, remain virtually unchanged. The “excess” of goods is gradually being absorbed. The economy remains at a high level of unemployment. The supply of loan capital increases, but since the demand for it from business is low, the loan interest rate falls. Despite the listed negative aspects, many economists view this phase of the economic cycle as preparation for the subsequent recovery: here the dissemination of technical achievements in the national economy takes place, the structure of production changes, which is freed from unprofitable enterprises and unpromising industries. The period of depression is characterized by a state of uncertainty and disorderly actions of business entities, especially trade intermediaries and stock agents. Even after the recession ends, entrepreneurs' trust in each other is difficult to restore.

However, economic conditions are gradually stabilizing, and the next phase of the cycle begins - revival. At first, it is characterized by a slight gradual increase in capital investment, production volumes, employment, prices, and interest rates. The conditional boundary of this phase can be drawn at the point where macroeconomic indicators reach pre-crisis levels. Then a rapid increase in production begins. Unemployment is reduced to a minimum. The demand for loan capital and the loan interest rate are growing. Rapid development continues until the economy reaches its highest point of development and the cycle ends.

Along with general cyclical crises affecting all spheres of the national economy, partial crises, covering any one area of the economy, for example credit relations. There are sectoral crises that extend to individual sectors of industry, agriculture, and transport. Structural crises (energy, raw materials, food) are caused by large imbalances in the development of the national economy. At the same time, cyclical development, despite its oscillatory movements, reveals a strategic growth trend, i.e. has a forward direction of movement.

The reasons causing changes in economic activity of production over time are studied by the theory of business cycles, which is sometimes called the theory of economic conditions. Today there are many similar theories. However, the nature of the cycle is still one of the most controversial and poorly understood problems. Researchers involved in the study of market dynamics can be divided into those who do not recognize the existence of periodically repeating cycles in social life, and those who take a deterministic position and argue that economic cycles manifest themselves with the regularity of ebbs and flows.

Representatives of the first direction, to which the most authoritative scientists of the modern Western neoclassical school belong, believe that cycles are the result of random influences (impulses or shocks) on the economic system, which causes a cyclical response model, i.e. cyclicality is the result of the impact on the economy of a series independent impulses. The foundations of this approach were laid in 1927 by the Soviet economist E. E. Slutsky (1880–1948). After 30 years, this direction has received wide recognition in the West.

Representatives of the second direction tend to consider the cycle as a kind of fundamental principle, an elementary indivisible “atom” of the real world. A cycle in this interpretation is a special, universal and absolute formation of the material world. The structure of the cycle is formed by two opposing material objects, which are in the process of interaction in it (Yu. N. Sokolov. The cycle as the basis of the universe. Stavropol, 1995).

Currently, statisticians and economists are not able to give accurate forecasts of economic conditions, but can only determine its general trend. This is explained by the fact that, firstly, it is difficult to take into account all factors, especially during periods of economic instability and political upheaval. Secondly, the international environment has a significant impact on the national economy. Thirdly, even having correctly identified a trend, it is difficult to predict the exact dates of the phases and change economic policy in time. Finally, the actions of entrepreneurs can aggravate undesirable deviations in the market situation.

Modern social science knows more than a thousand types of economic cyclicality. The table shows the six most frequently encountered ones, but economics operates primarily with the first four of them.

The question of the causes of the cyclical phenomenon in the economy is interpreted ambiguously by various economic schools.

In recent decades, the most popular explanations for cycles are the action of the animation-acceleration mechanism, as well as the so-called pro-cyclical government policy.

The concept of a multiplier was first formulated by the English economist R. Kahn during the global economic crisis of 1929–1933. Kahn called the multiplier the coefficient that determines the increase in employment for each unit of government spending aimed at public works. Keynes developed this idea of the employment multiplier from Kahn and used it when considering the role of investment in the economy. At the same time, Keynes distinguished autonomous investments Ia, changes in volumes of which do not depend on changes in the level of income, but are determined by certain factors external to the economy, for example, uneven development of scientific and technical progress, and derivative investments Iin, the volumes of which are directly determined by fluctuations in levels of economic activity.

As is known, one of the expressions of the equilibrium situation in the economy is equality

where Y is income; C - consumption; I - investment.

This equality can be represented in the form

where CY is the marginal propensity to consume; Ia - autonomous investments.

In this case, autonomous investment will be defined as the difference between total income and its consumed part:

Ia = Y – CYY, or Ia = Y (1 – CY).

From here, income will be determined by the formula

Y = Ia / (1 – CY).

If we express this equation in incremental quantities, it will take the following form:

DY = DIa 1 / (1 – CY).

In this formula, 1 / (1 – CY) will represent the income multiplier K, i.e. a coefficient that shows how much national income will increase with an increase in autonomous investment by DIa. (Similarly, in the case of a reduction in investment, the multiplier will show how much income will decrease compared to investment.)

Since CY = 1 – SY, where SY is the marginal propensity to save, the multiplier in question can also be expressed as 1 / SY.

The multiplier coefficient, as can be seen from the formula, directly depends on CY, i.e. the population's propensity to consume. The greater this propensity, the greater the multiplier, and vice versa. For example, if the propensity to consume is equal to 1/2, then the national income multiplier will be equal to 2, and if the population consumes 3/4 of the national income, then the multiplier will double. Accordingly, with the same volume of investment increment, the economy may have different increments in national income due to differences in the population’s propensities to consume and multiplier coefficients. For example, an increase in investment by 400 billion rubles. with a multiplier coefficient of 2, it will increase national income in the amount of only 800 billion rubles, and with K = 4 - in the amount of 1600 billion rubles.

Unlike the multiplier, the accelerator effect is no longer associated with autonomous, but with derivative investments, i.e. with those that depend on changes in income levels.

V = DI / (Yt – Yt– 1),

where DI is the increase in investment; (Yt – Yt – 1) - increase in income for the period under review.

In accordance with this formula, the increase in investment can be presented as follows:

DI = V (Yt – Yt – 1).

The point of the accelerator is that the increase in investments can be more dramatic than the increase in income that caused it.

The described scheme of interaction between the multiplier and the accelerator constitutes the acceleration-animation mechanism of the cycle.

The general model of interaction between the multiplier and the accelerator is characterized by the following income formula by J.R. Hicks:

Yt = (1 – S) Yt – 1 + V (Yt – 1 – Yt – 2) + At,

where Yt is national income; S is the share of savings in national income; (1 – S) - the share of consumption in it (or the propensity to consume); V - accelerator coefficient; At - autonomous demand.

The theory of the real business cycle. Although many Western economic schools, in accordance with the traditions of Keynesianism, associate the causes of business cycles with changes in aggregate demand, a number of neoclassical economists in recent years have substantiated the thesis about the decisive role of supply in the formation of cycles.

From this perspective, the main reasons for the emergence of the economic cycle are considered to be changes in technology, availability of resources, levels of labor productivity, i.e. those factors that determine the possibilities of aggregate supply.

According to the position of supporters of this theory, an economic cycle can arise, for example, in connection with a rise in world oil prices. A rise in oil prices may make it too expensive to use some types of equipment, which will lead to a decrease in output per worker, i.e. to a decrease in labor productivity. A decrease in productivity means that the economy creates less real product, i.e. aggregate supply decreases. But if the volume of aggregate supply decreases, then, consequently, the need for money decreases (since a smaller mass of goods and services is served), and hence the volume of money borrowed by entrepreneurs from banks decreases. All this will lead to a reduction in the supply of money, which will cause a decrease in aggregate demand, and to the same extent that aggregate supply initially decreased. As a result, there will be a decrease in the total volume of real equilibrium production at a constant price level (i.e., a situation similar to the Keynesian model will arise, which assumes the possibility of a reduction in real output at a constant price level).

5.3. Causes of business cycles. Animation-acceleration mechanism of cycles

The question of the causes of the cyclical phenomenon in the economy is interpreted ambiguously by various economic schools.

In recent decades, the most popular explanations for cycles are the action of the animation-acceleration mechanism, as well as the so-called pro-cyclical government policy.

As is known, one of the expressions of the equilibrium situation in the economy is equality

where Y is income; C – consumption; I – investments.

This equality can be represented in the form

Y = C Y Y + I a ,

where C Y is the marginal propensity to consume; I a – autonomous investments.

In this case, autonomous investment will be defined as the difference between total income and its consumed part:

I a = Y – C Y Y, or I a = Y (1 – C Y).

From here, income will be determined by the formula

Y = I a / (1 – C Y).

If we express this equation in incremental quantities, it will take the following form:

Y = I a · 1 / (1 – C Y).

In this formula, 1 / (1 – C Y) will represent the income multiplier K, i.e. coefficient that shows how much national income will increase with an increase in autonomous investment by I a. (Similarly, in the case of a reduction in investment, the multiplier will show how much income will decrease compared to investment.)

Since C Y = 1 – S Y , where S Y is the marginal propensity to save, the multiplier in question can also be expressed as 1 / S Y .

Unlike the multiplier, the accelerator effect is no longer associated with autonomous, but with derivative investments, i.e. with those that depend on changes in income levels.

V = I / (Y t – Y t– 1),

where I is the increase in investment; (Y t – Y t – 1) – increase in income for the period under review.

In accordance with this formula, the increase in investment can be presented as follows:

I = V (Y t – Y t – 1).

The point of the accelerator is that the increase in investments can be more dramatic than the increase in income that caused it.

The described scheme of interaction between the multiplier and the accelerator constitutes the acceleration-animation mechanism of the cycle.

The general model of interaction between the multiplier and the accelerator is characterized by the following income formula by J.R. Hicks:

Y t = (1 – S) Y t – 1 + V (Y t – 1 – Y t – 2) + A t,

where Y t is national income; S is the share of savings in national income; (1 – S) – share of consumption in it (or propensity to consume); V – accelerator coefficient; A t – autonomous demand.

The theory of equilibrium business cycle is associated primarily with the ideas of monetarists. According to these ideas, states in many Western countries in the post-war period act as unique generators of monetary “shocks” that bring the economic system out of equilibrium, and thus support cyclical fluctuations in the economy. If the government, pursuing an expansionist policy, increases the growth rate of the amount of money in circulation, then after some (several months) delay the growth rate of nominal GNP begins to accelerate, approximately corresponding to the growth of the money supply. In this case, at first, almost all of the acceleration in nominal GNP growth will represent an increase in real output, accompanied by a decrease in unemployment. As the expansion phase continues, an increase in GNP will simply mean an increase in the absolute price level. If the growth rate of the money supply in circulation slows down, then the corresponding reactions of nominal and real GNP, as well as the absolute price level, change places 16. M. Friedman and A. Schwartz proved the possibility of money influencing the development of the business cycle by studying the dynamics of money circulation in the USA for the period 1867 - 1960.

In the 1970s - 1980s. The point of view that the state itself is often a generator of cyclical phenomena in the economy began to be actively developed by representatives of such a direction as the theory of rational expectations 17.

Business cycles: concept and phases, causes of cyclical fluctuations, types of cycles, features of the mechanism and forms of the cycle in modern conditions. Business cycle: causes, phases and types Mechanism of business cycles

More on topic 14.3. REASONS OF BUSINESS CYCLES. MULTIPLIED ACCELERATION MECHANISM CYCLES:

5.3. Causes of business cycles. Animation-acceleration mechanism of cycles