The maximum point of the cycle is called the peak. Expansion phase (rise)

The condition for sustainability and stability of the country's economic development is, i.e. balance between production and consumption, aggregate demand and aggregate supply. However, in a market economy, the state of equilibrium is periodically disturbed. A certain cyclicity is observed, i.e. repeatability, in the functioning of the national economy, when periods of economic recovery are replaced by periods of recession and depression, and then again there is an increase and boom. Cyclicity can also be defined as movement from one macroeconomic equilibrium to another, from one economic cycle (business cycle) to another.

Economic theory identifies a number of cycles of economic development (growth): long-wave cycles expressing long-term fluctuations in economic activity with a period of about 50 years and called "Kondratiev cycles" (after the Russian economist Nikolai Dmitrievich Kondratiev (1892-1938); normal, or so-called large, industrial cycles with a period of 8 to 12 years ("Juglar cycles"), named after the French economist K. Juglar (1819-1908) for his study of industrial fluctuations in France, Great Britain and the USA: small cycles, or "Kitchin cycles" (according to named after the American economist who discovered them - J. Kitchin (1861 - 1932), lasting 3-4 years and covering the period that is necessary for the massive renewal of fixed assets.

Cycle phases

In the classical version, the economic cycle develops of four phases: recession, depression, rise and boom. The final and initial phase in the development of the cycle is the overproduction of products in comparison with demand. In turn, overproduction occurs due to excessive investment (this leads to an overaccumulation of capital) compared to .

Overaccumulation of capital leads to excess capacity, an increase in inventories, a slowdown in capital turnover and, as a result, a drop in the income of entrepreneurs and their employees. In turn, this leads to a decrease in aggregate demand for investment and consumer goods and services, and ultimately to a fall in GDP / NI growth rates and even its reduction, with all the ensuing consequences - falling stock prices, rising unemployment, etc. Coming decline phase.

IN phase of depression the decline in production stops, but remains high, the decrease in the rate of loan interest stimulates the demand for capital, this creates the prerequisites for the accumulation of capital. A new phase in the movement of the cycle begins - climb, during which investment grows, unemployment decreases, demand grows, there is an increase in the rate of profit and interest rates. Economic growth often translates into boom, When production volume exceeds the pre-crisis level. Everyone is involved, unemployment reaches a minimum level. accompanied by a general increase wages and prices. As a result, actual GDP exceeds potential GDP. Coming inflationary gap. The growth of business activity stops. Beyond the boom, a marketing problem sets in, production declines, and GDP growth rates drop sharply (Figure 23.2).

Rice. 23.2. Business Cycle Model

Cycle phase terminology may vary. Thus, a recession is often called a recession, an upturn is a recovery, and a boom is often called prosperity.

Evolution of business cycles

Industrial cycles were already clearly visible in early XIX V. In 1825 in England, which at that time was the economic leader, the first economic crisis broke out. In the future, economic crises were repeated periodically in 8-12 years, gradually taking on a global character.

In the first half of the XX century. The world crisis of 1929-1933 was the longest and deepest. The fall in GDP reached more than 40% in some countries.

The post-war economic cycles were greatly influenced by the scientific and technological revolution and the state counter-cyclical regulation of the economy, and then by the “new economy”. As a result, the nature of the cycles is changing, including the depth of crises and the duration of the main phases, the interval between which has decreased from 8 to 4 years. And the most destructive was the crisis of the mid-70s.

In the 90s. in developed countries, there were undulating fluctuations in the production process without a deep decline in production, the severity of crisis manifestations decreased, and factors counteracting the fall in production intensified. This was especially evident in the dynamics of GDP and industrial production.

Since the end of the 90s. 20th century In the development of the economies of the United States, Japan and the European Union, periods of recession, stagnation and low growth rates alternated with periods of recovery. For example, in 1999 and 2000 average annual GDP growth in the United States was 4.1%, and in 2001 it increased by only 1.2%. In 2002, GDP growth in the United States accelerated noticeably, but the weakening of economic activity was observed in these years in most developed and developing countries. 2003 was marked by a global economic downturn. According to UN forecasts, in the coming years, the recovery in the global economy will occur unevenly and at a slow pace.

The cyclicality of the economy is a special form of development with uneven economic growth in different periods, which are called stages or phases of the economic cycle.

The economic cycle includes four phases:

• crisis (recession, recession),
• depression (stagnation),
• revival (expansion),
• an upsurge ending in a boom or peak.

Thus, economic cycles or waves- These are periodic fluctuations in economic or business activity, during which the market economy goes from one phase to the next one.

Consider the features of each phase of the economic cycle.

The phases of the economic cycle are shown in the figure.

The first phase of the economic cycle is a crisis, i.e. a sharp violation of the existing balance.

A crisis differs from an imbalance between supply and demand for a particular product or in any sector of the economy in that it arises as a general overproduction, accompanied by a rapid drop in prices, bank failures and a stop manufacturing enterprises, the growth of the loan interest, unemployment.

A crisis is the most crushing phase of any industrial cycle. This is due to its unexpectedness for entrepreneurs, they, as a rule, are not ready for it. Therefore, the crisis is in the nature of a collapse. Before him, the economy prospers in all respects, everyone gets big profits, and then a crisis begins, and the foundations are crumbling not in one particular industry, but in all at the same time.

In the recession phase of the economic cycle, demand begins to decrease, while supply remains at the same level. Enterprises operate, producing products in larger volumes than required by the current market situation. The market is overflowing with goods, demand is rapidly decreasing, but production continues, although the size of the commodity stocks is already very large. A rapid drop in prices begins, interrupting the mechanism of capital circulation. The crisis of non-payments, lack of cash, difficulties with marketing lead to a belated but rapid curtailment of production, which leads to an increase in unemployment and a decrease in the purchasing power of society, which further complicates marketing.

A period of collapses begins, the closure of enterprises, banks "burst", as the non-repayment of loans is massive. In the crisis phase of the economic cycle, unemployment rises sharply, reaching its critical point. Naturally, in such conditions, no one thinks about capital investments. Firms are not able to pay current payments, as there is a "freeze" of capital in the form of unsold goods.

At this stage of the economic cycle, in a recession, there is a general pursuit of money, so the cost of a loan, the interest rate, is growing rapidly. Crashes stock exchanges, a wave of bankruptcies and closures of enterprises mark the end of the crisis and the beginning of the depression. Recession presents such a bleak picture. The downturn phase in the economic cycle usually does not last long, the crisis looks long if it is combined with a depression.

Depression (stagnation)- this is the phase of the economic cycle in which there is a certain stabilization of the situation. "Depression is a period of adjustment economic life to new conditions and needs, the phase of finding a new balance.

The crushing fall stops, as there is nowhere else to "fall". Macroeconomic indicators, prices, wages, unemployment are stabilizing at a certain level. After the end of the decline, the upward trend is not immediately visible, since production is carried out on a narrowed base. This is due to the fact that manufacturers are afraid to expand production due to the lack of confidence that there will be sufficient demand for manufactured products.

In the depression phase of the economic cycle, confidence in a stable conjuncture is restored with difficulty. Entrepreneurs are cautiously looking around, even after some stabilization in demand, they are afraid to invest additional funds in their business. This phase is long and may be the longest in the entire economic cycle. The stagnation can last from several months to several years.

With a general stagnation in the economy, only one indicator continues to change: the loan interest rate is decreasing due to the fact that "surviving" entrepreneurs have free cash due to low production costs, because wages are frozen at their lowest point. If we take the classical version of the economic cycle, then in this phase the rate of interest on money loans falls to its lowest point within this cycle.

In the depression stage, prices that have stabilized at a low level stimulate consumption, and the business cycle continues. As a result of the increase in demand for civilian goods, the demand for means of production also increases. But the crisis showed the failure of fixed capital in the technical and technological sense. For its renewal, the first investments are made, and if they are successful, the level of investment begins to rise slowly. Production is starting to pick up slowly. The next phase of the economic cycle begins - the stage of recovery.

revival- this phase of the economic cycle is characterized, first of all, by the expansion of the production of means of production. Therefore, the impulse begins with enterprises producing equipment, elements of fixed capital. "The recovery phase is a phase of slow growth in production, caused by the first successful investments, a gradual increase in prices, which entails an increase in wages, an increase in employment, profits. The reaction to this is an increase in the lending rate."

characteristic feature this phase of the economic cycle is the lack of clear boundaries of the beginning of the phase. This is due to the fact that after the depression, various sectors of the economy begin to emerge from it after different periods of time. During the period of recovery, entrepreneurs venture on the first steps forward, finding that the risk is fully justified, and capital investments are profitable. Production expands following an increase in demand, unemployment decreases, and wages rise. At some point, economic indicators reach the pre-crisis level, and then the next phase of the economic cycle begins - the rise.

It is the achievement of the pre-crisis level of production that is the end of the recovery and the beginning of the phase of the rise of the economic cycle.

Climb- all economic indicators begin to rise at a much higher rate than in the previous phase. Prices begin to rise, but they are compensated by an increase in wages, as a result, the entire volume of output is absorbed by the growing demand of the population. However, in this phase of the economic cycle, the condition of excess of the growth rate of prices over the growth rate of wages must be observed. The consequence is an increase in employment, and labor resources become the only limiting factor for further development. "The acceleration of economic development can also be seen in waves of innovation, the emergence of a mass of new goods and new enterprises, in the rapid growth of capital investments, stock prices and other securities, interest rates, prices and wages. Everything is produced and traded at a profit."

Naturally, this cannot continue indefinitely, and at some point the recovery phase ends at the highest point of the economic cycle, called the peak or boom. During this phase, discoveries are made that allow the economy to reach a new level within a given economic cycle, but the introduction of new technologies inevitably leads to an increase in production costs, which results in an increase in the prices of manufactured goods without raising the level of wages. This leads to a drop in consumer opportunities. There is a growing disproportion between supply and demand. The economic boom sharply turns into a crisis of the entire economic system, the economic cycle ends, a new one begins.

The paradox of the recovery phase lies in the fact that after a difficult overcoming of the crisis and its consequences, the economy within the economic cycle, through the development of crisis factors, is rapidly moving towards a new crisis.

New features of the phases of economic cycles

Currently, economic cycles and crises in countries with a developed market have received new features and characteristics. The foundation for this was the anti-crisis policy of the state, applied in all countries following the capitalist path of development, and the development of international integration, the socialization of production and capital. Currently, the crises in Western countries are different from the Russian crises. The following features of the modern economic cycle can be distinguished.

Firstly, crises have become much more frequent, the duration of cycles has been reduced to 5–7 years. At the end of the 19th - the first half of the 20th century, the duration of the cycles was 11-12 years.

Secondly, the nature of the onset of the phases of the cycle has changed. In the past, phases of the cycle, such as a crisis or an upsurge, occurred at different countries at different times. Due to this, the destructive force of the cycle was less than at present, when the phases of the cycle occur simultaneously in most countries. This is due to a large extent to the fact that, as a result of the increased integration of national economies, a crisis in one country gives rise to a crisis in other countries. There is a kind of chain reaction in the business world.

Thirdly, as a result of the policy of counter-cyclical regulation, the entire course of the cycle has changed. Sharp boundaries disappeared, the phases began to smoothly pass one into another. This policy is also responsible for the phenomenon of "falling out" of certain phases from the course of the cycle. For example, after a crisis, a revival could immediately come, bypassing the phase of depression (Fig. 2).

Smoothing economic cycles- the result of the application of counter-cyclical regulation

Fourth, since the late 1960s cyclical crisis is accompanied by rising inflation. Unemployment is becoming chronic and affecting new categories of workers. In fact, a new type of crisis economy emerged - the stagflationary economy.

Fifth, there has been a change in the nature of crises. After a series of cycles with weak crises and a short depression or no depression at all, a crisis occurs that covers all spheres and sectors of the economy. The force of the crisis is enormous, all countries are involved in it.

Features of economic development cycles

An important feature of cyclic fluctuations is the difference in fluctuations in the levels of employment and output in industries that produce capital goods and durable goods, and industries aimed at the production of non-durable goods. The former respond to cyclical fluctuations with much greater force than the latter. The reasons for this lie in the following.

1. Purchases of new equipment or durable goods can be delayed as they are not essentials and demand is sharply reduced.
2. In addition, there are a small number of firms in the capital goods market at the same time, and this oligopolistic nature of the market makes it possible for management to quickly reduce the number of employees and output during periods of recession.
3. At the same time, prices for their products remain approximately at the pre-crisis level.
4. The level of employment and production volumes in enterprises producing non-durable goods cannot be subject to large fluctuations, since in the markets for these goods there is more developed competition and firms cannot counteract lower prices by reducing the number of workers and the volume of output.

Economic cycles have never been similar to one another, each of them has its own characteristics.

Some phases may be missing in the cycles, for example, a revival may immediately follow a crisis.

Between crises, the business world does not remain calm. The economy may experience major or relatively minor recessions and turmoil. With regard to economic cycles on this occasion, "the term pre-crisis (Vörkris) has taken root among German researchers - a short-term phenomenon, but often announcing the approach of a catastrophe" .

There are the following main types of crises:

• cyclic,
• intermediate,
• partial,
• industry,
• structural.

Types of crises in economic cycles

Types of crises	Description
Cyclic Crisis	A cyclical crisis is the most profound crisis in its impact. It covers all areas and sectors of the economy. Feature of this crisis: the violation of the existing equilibrium causes the organization of production to a qualitatively more high level. As a result, the next cycle will begin on a qualitatively different economic basis. Obsolete equipment is being replaced and new equipment is being introduced; production costs are reduced; the structure of production comes into line with the economic requirements of society.
Intermediate Crisis	The intermediate crisis does not cover all sectors of the economy, it is local and of a short duration. It is a timely response to the emerging contradictions and disproportions in the economy. As a result, the phase of revival or recovery may be interrupted for some time. Intermediate crises are not particularly acute, they smooth out contradictions, softening the cyclical crisis, which turns out to be less deep and destructive.
Partial Crisis	A partial crisis can occur both during an upswing and during a depression or recovery. The crisis affects only one specific area. For example, the financial crisis of 1997 affected the monetary sphere in almost all countries, although it began on the stock exchanges of Southeast Asia.
Industry crisis	The sectoral crisis covers related sectors of the economy. The reasons for its occurrence may be an increase in prices for raw materials and energy carriers, cheap imports, natural aging of industries, the emergence of new ones, and a change in the industry structure.
Structural crisis	A structural crisis usually continues for several economic cycles. The need for a radical change in the structure of production with the use of new technological advances is the main cause of structural crises. Examples of structural crises are the energy, raw materials, and food crises of the 1970s and 1980s.

The paradox of crises is that in this phase of the economic cycle, not only the limit of development is revealed, but also an impulse for further development of the economy. Such a kind of "stimulator" with destructive properties and consequences, after the onset of which, willy-nilly, new economic realities have to be created.

During the crisis phase of the economic cycle, the motives for reducing production costs first appear sharply and new opportunities are sought for this. Then there is an awareness of the need to update production and economic activities on a new technical and technological basis. Having marked the end of one economic cycle, the crisis in this way begins the next one.

Crisis and depression are always followed by recovery. As a result of crises, the economy does not collapse completely, but moves to a qualitatively new level of development.

Types of economic cycles

In economic life, there are a variety of fluctuations that are of an objective nature. Of these, four types of economic cycles most used by economists can be distinguished.

1. The renewal cycles of individual elements of capital are 2–4 years.
2. Fixed capital renewal cycles are 7–12 years.
3. The cycles of renovation of parts of buildings and structures are 18–25 years.
4. Cycles associated with demographic processes and agricultural production - 45-50 years.

The cycles of renewal of individual elements of capital are called Kitchin cycles. These are small cycles that are associated with fluctuations in world gold reserves. Building cycles are called Blacksmith cycles, and they are associated with the periodic renewal of dwellings and certain types of industrial buildings.

Of main interest to the business world are the Zhuglar cycles associated with the renewal of fixed capital. This type of economic cycle has other names: business cycle, industrial or production cycle. When studying economic cycles, economists drew attention to the effect of a larger increase in the production of national income with relatively less capital investment. This effect is called acceleration.

The essence of the accelerator is that an increase in demand for commodities leads to an increasing demand for means of production, and, consequently, for investment. Acceleration generates, on the one hand, instability in the economy, on the other hand, during periods of recovery and recovery, it contributes to the growth of capital investments, which speeds up the cycle. But in the phases of crisis and depression, due to the existence of an accelerator, the destructive force of the recession increases, because the reduction in investment outstrips the reduction in production.

The accelerator is the ratio of investment to the increase in production or national income and is expressed by the formula:

Where V is an accelerator, I is an investment, D is income or finished products, t is the corresponding year.

The theory of long-term or "long waves" was developed by the Russian scientist N.D. Kondratiev in the 1920s. XX century. According to it, in the history of the development of the economy, periods of about fifty years can be distinguished with accelerated or slow development. After analyzing the data for 140 years, Kondratiev identified three cycles of economic development with "upward" or "downward" waves.

The upward wave - from the end of the 80s. XVIII century to 1810–1817

Downward wave - from 1810-1817 until the period 1844–1851

The upward wave - from 1844-1851. until the period 1870–1875.

Downward wave - from 1870-1875 until the period 1890–1896

The upward wave - from 1890-1896 until the period 1914-1920.

Downward wave - from 1914-1920.

If we continue to follow his theory, then the low point of the bearish wave will be right at the time of the Great Depression. And then on a serious crisis of the mid-70s. XX century. Kondratiev explained the existence of large cycles by different periods of functioning of economic goods, for the production of which it is also necessary to spend different times, especially for the accumulation of capital for their creation. Another breakthrough in scientific and technological progress marks the beginning of a new cycle. Then, in the upswing stage, the products of this breakthrough are widely adopted.

If we analyze the long waves of Kondratiev, we can notice the following feature: industrial cycles occurring during the period of an upward wave are characterized by long and powerful ups and relatively short and weak depressions. At the same time, industrial cycles of a downward wave have absolutely opposite signs.

Studies of the patterns of long-term economic development made it possible to generalize them in the theory of technological patterns.

The technological order is an integral complex of technologically related industries and the corresponding technical and economic paradigms, the periodic process of successive replacement of which determines the "long-wave" rhythm of modern economic growth.

The chronology of technological modes corresponds to the theory of long waves of Kondratiev, according to this, the following types of economic cycles or waves are distinguished:

1. The first wave (1785-1835) is the first technological order based on textile production technologies.
2. The second wave (1830-1890) - the second technological order, was formed on the basis of steam engines, railway and water transport based on them, as well as ferrous metallurgy and machine tool building.
3. The third wave (1880-1940) is the third technological order, the core of which was the electric motor and steel production.
4. The fourth wave (1930-1990) is the fourth technological order based on the internal combustion engine and petrochemical production.
5. The fifth wave (1985-2035 presumably) is the fifth technological mode, formed on the basis of the semiconductor industry and technologies for the production of microelectronic components, as well as information technologies and biotechnology.

During each structural crisis of the world economy and each depression that accompanies the process of replacing the dominant technological modes, new opportunities for economic success open up. The countries that were in the lead in the previous period are faced with the depreciation of capital and the skills of those employed in the industries of the obsolete technological order, while the countries that managed to create the groundwork in the formation of production and technological systems of the new technological order turn out to be centers of attraction for capital released from obsolete industries. Each time the change in the dominant technological structures is accompanied by serious shifts in the international division of labor, the renewal of the composition of the most prosperous countries.

Cyclicity can be considered as one of the ways of self-regulation market economy. Cyclicity is the fundamental basis for the development of not only a market economy, but the whole society as a whole. If there were no cyclicity, then the development of the whole society would stop somewhere at the level of the Middle Ages.

Literature

1. Bunkina M.K., Semenov V.A. Macroeconomics. – M.: Dashkov i K, 2008.
2. Zhuravleva G.P. Economic theory. – M.: INFRA-M, 2011
3. Galperin V. Macroeconomics. - St. Petersburg: School of Economics, 2007
4. Sazhina M.A. Economic theory. – M.: INFRA-M, 2007.
5. Shishkin A.F. Economic theory: In 2 books. Book. 1. - M.: VLADOS, 2002.
6. Economic theory. / Ed. V.D. Kamaev. – M.: VLADOS, 2004.
7. Salikhov B.V. Economic theory. – M.: Dashkov i K, 2014.

The economy is not static. She, like a living being, is constantly changing. The level of production and employment of the population is changing, demand is growing and falling, commodity prices are rising, stock indices are collapsing. Everything is in a state of dynamics, eternal circulation, periodic fall and growth. Such periodic fluctuations are called business or business cycle. The cyclical nature of the economy is characteristic of any country with a market type of management. Business cycles are an inevitable and necessary element in the development of the world economy.

Business cycle: concept, causes and phases

(economic cycle) is a periodically repeating fluctuation in the level of economic activity.

Another name for the business cycle is business cycle (business cycle).

In fact, the economic cycle is an alternating rise and fall in business activity (social production) in a single state or around the world (some region).

It is worth noting that although we are talking here about the cyclical nature of the economy, in fact, these fluctuations in business activity are irregular and poorly predictable. Therefore, the word "cycle" is rather conditional.

Reasons for business cycles:

• economic shocks (impulse effects on the economy): technological breakthroughs, the discovery of new energy sources, wars;
• unplanned increase in stocks of raw materials and goods, investments in fixed assets;
• changes in prices for raw materials;
• seasonal Agriculture;
• struggle of trade unions for higher wages and job security.

It is customary to distinguish 4 main phases of the economic (business) cycle, they are shown in the figure below:

The main phases of the economic (business) cycle: rise, peak, recession and bottom.

Period of the economic cycle- the time interval between two identical states of business activity (peaks or bottoms).

It should be noted that, despite the cyclical nature of GDP fluctuations, its long-term trend has upward trend. That is, the peak of the economy is also replaced by depression, but each time these points move higher and higher on the chart.

The main phases of the economic cycle :

1. Rise (revival; recovery) is the growth of production and employment of the population.

Inflation is low and demand is picking up as consumers seek to make purchases they put off during the previous crisis. Innovative projects are implemented and quickly paid off.

2. Peak- the highest point of economic growth, characterized by a maximum of business activity.

The unemployment rate is very low or virtually non-existent. Production facilities operate as efficiently as possible. Inflation usually picks up as the market becomes saturated with goods and competition increases. The payback period increases, the business takes more and more long-term loans, the possibility of repayment of which is reduced.

3. Recession (recession, crisis; recession) - a decrease in business activity, production volumes and investment levels, leading to an increase in unemployment.

There is an overproduction of goods, prices are falling sharply. As a result, the volume of production decreases, which leads to an increase in unemployment. This causes a decrease in the income of the population and, accordingly, a reduction in effective demand.

A particularly long and deep recession is called depression (depression).

The Great Depression Show

One of the most famous and longest global crises is “ The Great Depression» ( great depression) lasted about 10 years (from 1929 to 1939) and affected a number of countries: the USA, Canada, France, Great Britain, Germany and others.

In Russia, the term "Great Depression" is often used only in relation to America, whose economy was hit especially hard by this crisis in the 1930s. It was preceded by a precipitous decline in the stock price that began on October 24, 1929 ("Black Thursday").

The exact causes of the Great Depression are still a matter of debate among economists around the world.

4. Bottom (through) - the lowest point of business activity, characterized by a minimum level of production and maximum unemployment.

During this period, an excess of goods diverges (some at low prices, some simply spoil). The fall in prices stops, production volumes increase slightly, but trade is still sluggish. Therefore, capital, not finding application in the sphere of trade and production, flocks to banks. This increases the money supply and leads to lower interest rates on loans.

It is believed that the "bottom" phase usually does not last long. However, as history shows, this rule does not always work. The previously mentioned "Great Depression" lasted for 10 years (1929-1939).

Types of economic cycles

Modern economic science knows more than 1,380 various kinds business cycles. Most often you can find a classification according to the duration and frequency of cycles. According to it, the following types of economic cycles :

1. Short-term Kitchin cycles- Duration 2-4 years.

These cycles were discovered back in the 1920s by the English economist Joseph Kitchin. Kitchin explained such short-term fluctuations in the economy by changes in world gold reserves.

Of course, today such an explanation can no longer be considered satisfactory. Modern economists explain the existence of Kitchin cycles time lags- delays in obtaining by firms the commercial information necessary for decision-making.

For example, when the market is saturated with a product, it is necessary to reduce the volume of production. But, as a rule, such information is received by the enterprise not immediately, but with a delay. As a result, resources are wasted in vain, and a surplus of hard-to-sell goods is formed in warehouses.

2. Medium-term Juglar cycles– duration 7-10 years.

For the first time this type of economic cycles was described by the French economist Clement Juglar, after whom they were named.

If in Kitchin cycles there are fluctuations in the level of utilization of production capacities and, accordingly, in the volume of commodity stocks, then in the case of Juglar cycles, we are talking about fluctuations in the volume of investments in fixed capital.

The information lags of Kitchin cycles are supplemented by delays between making investment decisions and acquiring (creating, erecting) production capacities, as well as between a decline in demand and the liquidation of production capacities that have become redundant.

Therefore, Juglar cycles are longer than Kitchin cycles.

3. Rhythms of the Blacksmith– duration 15-20 years.

Named after the American economist and laureate Nobel Prize Simon Kuznets, who discovered them in 1930.

Kuznets attributed such cycles to demographic processes (in particular, the influx of immigrants) and changes in the construction industry. Therefore, he called them "demographic" or "building" cycles.

Today, some economists view Kuznets rhythms as "technological" cycles driven by technology upgrades.

4. Long Kondratiev waves– duration 40-60 years.

Discovered by Russian economist Nikolai Kondratiev in the 1920s.

Kondratiev cycles (K-cycles, K-waves) are explained by important discoveries in the framework of scientific and technological progress (steam engine, railways, electricity, internal combustion engine, computers) and the changes in the structure of social production caused by them.

These are the 4 main types of economic cycles in terms of duration. a number of researchers distinguish two more types of larger cycles:

5. Forrester cycles- Duration 200 years.

They are explained by the change in the materials used and energy sources.

6. Toffler cycles– duration 1000-2000 years.

Due to the development of civilizations.

Basic properties of the business cycle

Economic cycles are very diverse, have different duration and nature, but most of them have common features.

Basic properties of business cycles :

1. They are inherent in all countries with a market type of economy;
2. Despite the negative consequences of crises, they are inevitable and necessary, as they stimulate the development of the economy, forcing it to ascend to ever higher levels of development;
3. In any cycle, 4 typical phases can be distinguished: rise, peak, decline, bottom;
4. Fluctuations in business activity that form a cycle are influenced by not one, but many reasons:
   - seasonal changes, etc.;
   - demographic fluctuations (for example, "demographic pits");
   - differences in the service life of fixed capital elements (equipment, transport, buildings);
   - uneven scientific and technological progress, etc.;
5. IN modern world the nature of economic cycles is changing, under the influence of the processes of globalization of the economy - in particular, the crisis in one country will inevitably affect other states of the world.

Interesting neo-Keynesian Hicks–Frisch business cycle model with strict logic.

The neo-Keynesian Hicks-Frisch business cycle model.

According to the Hicks-Frisch business cycle model, cyclical fluctuations are caused by autonomous investments, i.e. investments in new products, new technologies, etc. Autonomous investments do not depend on income growth, but rather cause it. An increase in income leads to an increase in investment, depending on the amount of income: multiplier effect - accelerator.

But economic growth cannot occur indefinitely. The growth barrier is full employment(line AA).

Since the economy has reached a state of full employment, further growth in aggregate demand does not lead to an increase in the national product. As a result, the rate of wage growth begins to outpace the rate of growth of the national product, which becomes inflation factor. Rising inflation has a negative impact on the state of the economy: the business activity of economic entities is falling, the growth of real incomes is slowing down, and then they fall.

Now the accelerator is acting in the opposite direction.

This continues until the economy hits the line BB – negative net investment(when net investment is insufficient even to replace depreciated fixed capital). Competition is intensifying, the desire to reduce production costs encourages financially stable firms to start updating fixed capital, which ensures an upsurge in the economy.

Galyautdinov R.R.

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Business cycle- a special type of periodic fluctuations in economic activity, consisting in repeated expansion and contraction of the economy, which is accompanied by fluctuations in the level of business activity, production, employment, price levels, and others. Economic cycles may differ in duration, intensity and other parameters, however, the first researchers of cyclicity noticed that all cycles have the same clearly defined stages (phases).

Types of economic cycles

Economic cycles are classified according to their duration:

• centennial cycles, whose duration is one hundred years or more;
• "Kondratieff cycles" that last 50-70 years. They got their name from the outstanding Russian economist N.D. Kondratiev, who developed the theory of "long waves of economic conjuncture";
• classic cycles, lasting 10-12 years and characterized by massive renewal of fixed capital;
• Kitchin cycles, whose duration is 2-3 years.

Phases of the business cycle

• Peak- this is the highest point of rise in the country's business activity. At this stage of the economic cycle, unemployment is approaching its minimum levels, and the economy is maximally loaded and all the resources of the country are involved.
• After the peak always comes recession(depression), which is characterized by a gradual reduction in production volumes and a decrease in business activity. or recession of the economic cycle is recognized by economists only when the duration of the period of stagnation is more than six months. At this time, unemployment is growing, and industry is extremely weak.
• Bottom- the lowest point of the recession of the economic cycle, which heralds its imminent completion. True, there are exceptions: the Great Depression of the 1930s is an example of this.
• Rise of the business cycle reflects the flourishing of the country's economy and is accompanied by an increase in employment and production.

What are the causes of the business cycle?

The reasons for the cyclical development of the economy can be divided into external and internal.

External reasons:

• wars, due to which the economy is reorganized into the production of military products, attracts additional resources and labor, and after the end of hostilities, a recession occurs;
• the impact of some other external factors, for example, the so-called oil shocks, when oil-producing countries united into one cartel - OPEC - and sharply raised oil prices, which caused the largest post-war world crisis of 1974-1975, in which US production decline lasted 16 months and amounted to about 5%;
• major innovations (railroads, automobiles, electronics) that have a great impact on investment, production, consumption, and price levels.

Internal reasons:

• governments: a large amount of money generates an inflationary boom, and an insufficient amount reduces investment and leads to a decline in production;
• a change in the ratio of aggregate supply and aggregate demand, when, for example, radically new goods (personal computers) appear and demand switches to them, and manufacturers of old goods (typewriters) have to close production and transfer resources to other industries;
• reduction in production caused by the release of marketable products, i.e., the accumulation of large stocks due to low demand or high prices, when trade refuses goods that it cannot sell, and aggregate supply exceeds aggregate demand.

Expansion phase (rise)

The ascent usually begins from the level of development achieved during the previous cycle. It is carried out in favorable conditions of "optimized" parameters of the economic system as a whole.

It begins with the active commissioning of new enterprises and the modernization of old ones, the growth of production volumes, employment, investment, personal income, an increase in demand and prices, and ends with a boom - a period of super-high employment and overload of production capacities. There is an intensive growth of the economy, there is an economic growth, the level of output, employment, income and standard of living is rising. During a boom, the price level, the wage rate and the interest rate are very high. At the highest point of the cycle, called the peak, all of these indicators reach their maximum value. However, in view of the cyclical development of a market economy, it cannot always be in a state of peak (boom). During a boom period, the market becomes saturated with goods, leading to what Marx called an overproduction crisis. In addition, in this phase, inflation is growing, and the level of bank interest is rising. The economic system is working, but deviations are accumulating that do not allow the system to maintain dynamics, it becomes difficult to regulate, growth rates are falling, which inevitably leads to a crisis.

Decline phase. A crisis

Crisis is a natural form of reaction to deviations in the course of recovery. The inevitable consequence of the boom is a turn in the development of the cycle, when the growth of production is replaced by its decline. This indicates the onset of a crisis phase. The increase in unrealizable commodity stocks leads to a decrease in production volumes. The crisis manifests itself primarily in the overproduction of goods, the reduction of loans and the increase in interest rates. Industrial investment is reduced and, consequently, the demand for labor is falling. This means an increase in unemployment, a reduction in the length of the working week. The demand for raw materials falls, and then the supply of raw materials. There is a sharp decrease in profits, the demand for credit is weakening, interest rates are falling, bank debts are growing, bank crashes are occurring. Finally, if the recession is deep and prolonged, there is a reduction or slowdown in the growth of commodity prices.

The main phase of the cycle is the crisis (decline in production), since it is a mechanism for the destruction of old proportions, creating conditions for the future development of production. The crisis performs its "cleansing" function with the help of the price mechanism. In the crisis phase, commodity prices for obsolete products fall, interest rates fall, stock prices fall, company profits decrease, and many of them suffer losses, which causes a wave of bankruptcies.

But a crisis economy does not mean a bad economy. The crisis itself contains the possibility of overcoming it. The crisis first of all eliminates its immediate cause - the overaccumulation of capital, since in the crisis phase the economy gets rid of part of the fixed capital by depreciating and even destroying it. This stimulates the beginning of a mass renewal of production capital on a new technical basis. In a crisis, no entrepreneur can wait for the complete physical deterioration of machinery and equipment - the crisis forces everyone to carry out the widespread replacement of many elements of fixed capital. As a result, new demand is automatically born.

The recession phase is the most static, the economy freezes, firms reduce activity, tightly control their costs, cut costs, lay off part of the staff. With all this, there are shifts and changes that will become the basis of the coming upswing of economic growth. Under normal economic dynamics, it is difficult to regard recessions as periods that interrupt progressive development. With all their negative consequences, they are part of the development process along with other phases of the business cycle.

The causes of crises can be different.

Karl Marx noted that prior to the industrial revolution of the late 18th century, there were no regularly recurring booms and depressions. Since these cycles appear on the historical scene at about the same time as modern industry, Marx concluded that crises are an essential feature of the capitalist economy. Marx saw the cause of crises in the production of goods in excess of effective demand. And it's not about errors in assessing the capacity of the market, and not even about the desire of capital owners to get the maximum profit, but in the very nature and laws of the development of an economy aimed at making a profit.

Depression phase

The crisis is followed by depression. Outwardly, it manifests itself in a slowdown in the rate of decline, stagnation in bankruptcies, a decrease in commodity stocks, etc. Its reproductive function is an adaptation to new built proportions. In the depression phase, the goal facing firms (profit maximization) becomes tempting again, as there has been a reduction in production costs.

The reduction in production and downturns in production activity are an integral part of the economic cycle, the manifestation of self-regulation mechanisms, the restoration of efficiency and proportions in the economy. From this we can conclude that cyclicity, crises and depressions are not a sign of economic decline, on the contrary, it is a form of the economy's response to various deviations, a way to balance the structure and growth rates of the economy and its individual parts.

In the phase of depression, the decline in GDP and the increase in unemployment slow down significantly, the volume of investment is close to zero. Therefore, during this period, the economy is characterized by stagnation in production, sluggish trade, and the presence of a large mass of free money capital. After a certain time, the economic system overcomes the lowest point of the cycle, called the trough, and recovery begins. Under it, the movement of all economic indicators changes direction, income and employment begin to grow again, supply and demand parameters return to normal, bank interest decreases. When firms bring their output up to highest point reached in the previous cycle, the economic recovery begins.

Recovery phase

economic cycle recession market

During a revival, when prices, wages, employment, interest rates, etc., are gradually rising, massive investments are made that ensure expanded reproduction. Thus, the function of revival is to carry out expanded reproduction and achieve, through this, the pre-crisis level of production. By the end of the depression, the level of inflation and bank interest decreases, it becomes possible to invest money in production through savings and loans.

In a boom, when production is driven entirely by the pursuit of profit (while demand is dominated by wages), supply increasingly outstrips demand, setting the stage for a future downturn. This means that the ascent also performs the corresponding reproductive function: production strains forces, going beyond effective demand, which increases the contradictions in the mechanism of reproduction.

Thus, cyclicity is the basis for achieving a qualitatively new level of economic growth, a form of economic development and dynamics.