Class13 - Business Cycles US BC Facts AD-AS preview Class...

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Business Cycles US BC Facts AD-AS preview Class 13: Business Cycles Intro Julieta Caunedo CORNELL UNIVERSITY ABC Chapter 8 and Williamson Chapter chapter 3 (some)
Business Cycles US BC Facts AD-AS preview This Chapter What is a Business Cycle? The American Business Cycle: The Historical Record Business Cycle Facts Business Cycle Analysis: A Preview
Long Run Growth vs. Short-Run Fluctuations 1940 1950 1960 1970 1980 1990 2000 2010 -20 0 20 40 60 80 100 120 Log Levels real gdp
Short-Run Fluctuations: Output 1950 1960 1970 1980 1990 2000 -20 -15 -10 -5 0 5 10 15 Percentage Deviation from Hp-filtered trend real gdp
Business Cycles US BC Facts AD-AS preview What is a Business Cycle? Burns and Mitchell (Measuring Business Cycles, 1946) makes five main points about business cycles: 1. Business cycles are fluctuations of aggregate economic activity, not a specific variable 2. There are expansions/booms and contractions/recessions 3. Economic variables show comovement ; they have regular and predictable patterns of behavior over the course of the business cycle 4. The business cycle is recurrent, but not periodic 5. The business cycle is persistent : business cycles vary in duration from more than one year to twelve years
Business Cycles US BC Facts AD-AS preview Business Cycle Chronology U.S. research on cycles began in 1920 at the National Bureau of Economic Research (NBER) NBER maintains the business cycle chronology : a detailed history of business cycles NBER sponsors business cycle studies The NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
Business Cycles US BC Facts AD-AS preview Expansions and contractions A trough is the lowpoint of the recession A peak is the highpoint of the expansion Peaks and troughs are turning points and are officially

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