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Types And Characteristics Of Business Cycles

 Business Cycles

Meaning

Keynes has defined as “A trade cycle is composed of periods of goods trade characterised by rising prices and low redundancy percentages.”

Gordon has defined as “Business Cycles consist of recurring alteration of expansion and contraction in aggregate economic activity, the alternating movements in each direction being self reinforcing and pervading virtually all parts of the economy.”

The most satisfactory definition is by Estey: “Cyclical fluctuations are characterised by altering waves of expansion and contractions. They do not have a fixed rhythm they are cycles of contraction and expansion recur frequently and in fairly similar patterns.”

Types of Business Cycles

  1. The Short Kitchin Cycle
  2. This is also termed as the minor cycle which is of just about forty five months gap. It is well-known after the name of British economist Joseph Kitchin who made a difference among a major and a minor cycle year nineteen twenty three. He came to the termination on the basic of his research that a major cycle is composed of two or three minor cycles of forty five months.

  3. The Long Jugler Cycle
  4. This cycle is also termed as the major cycle. It is defined “as the fluctuation of business presentation among successive crises.” Clement Jugler, French economist presented those periods of prosperity, crisis and liquidation adopted each other always in the same order. Later economists have come to the end that a Jugler cycle’s duration is on the average nine and a half years.

  5. The Very Long Kondratieff
  6. N.D.Kondratieff, the Russian economist came to the conclusion that there are longer waves of cycles of more than fifty years duration made of six Jugler cycles. A very long cycle has come to be known as the Kondratieff wave.

  7. Building Cycles
  8. Another type of cycle associates to the construction of buildings which is of fairly regular duration. Its duration is two fold that of the major cycles and is on average of eighteen years duration. Such cycles are related with the names of Warren and Pearson.

  9. Kuznets Cycle
  10. Simon Kuznets propounded a new type of cycle the secular swing of sixteen to twenty two years which is so propounded that it dwarfs the seven to eleven years cycle into associated insignificance. This has come to be known as the Kuznets cycle.

Characteristics of Business Cycle

Business Cycles posses the following characteristic features:

  • Cyclical fluctuations are wave like shifts

  • Fluctuations are recurring in nature

  • They are non-periodic or uneven. In other words the peaks and channel do not occur at usual intervals.

  • They transpire in such total variables as productivity, earnings, employment and prices.

  • These variables move at about the same period in the same course but at diverse rates.

  • The sturdy commodity industries experience associatively wide fluctuations in productivity and employment but relatively small variations in prices. On the other hand, non-durable commodity industries experience relatively wide variations in prices but associatively small variations in productivity and employment.

  • Business cycles are not seasonal variations such as upswings in retail trade during festive seasons.

  • They are not secular trends such as long run growth or decline in fiscal performance.

  • Upswings and downswings are collective in their effects.

Therefore, business cycles are recurring fluctuations in total employment, earnings, productivity and price level.

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