The business cycle or economic cycle is the downward and upward movement of gross domestic product around its long-term growth trend. The length of a cycle is the period of time containing a single boom. These fluctuations typically involve shifts over time periods of relatively rapid economic growth, and periods of relative stagnation or decline. Business cycles are usually measured by considering the rate of real gross domestic product. Despite the often-applied term cycles, these fluctuations in economic activity do not exhibit uniform or predictable periodicity, the common or popular usage boom-and-bust cycle refers to fluctuations in which the expansion is rapid and the contraction severe. Prior to that point classical economics had either denied the existence of cycles, blamed them on external factors, notably war. Sismondi found vindication in the Panic of 1825, which was the first unarguably international economic crisis and they advocated government intervention and socialism, respectively, as the solution.
He devoted hundreds of pages of Das Kapital to crises, in Progress and Poverty, Henry George focused on lands role in crises – particularly land speculation – and proposed a single tax on land as a solution. In 1860 French economist Clement Juglar first identified economic cycles 7 to 11 years long, interest in the different typologies of cycles has waned since the development of modern macroeconomics, which gives little support to the idea of regular periodic cycles. There were great increases in productivity, industrial production and real per capita product throughout the period from 1870 to 1890 that included the Long Depression, there were significant increases in productivity in the years leading up to the Great Depression. Both the Long and Great Depressions were characterized by overcapacity and market saturation, the effect of technological progress can be seen by the purchasing power of an average hours work, which has grown from $3 in 1900 to $22 in 1990, measured in 2010 dollars.
There were similar increases in wages during the 19th century. See Financial crisis, 19th century for listing and details, the first of these crises not associated with a war was the Panic of 1825. Business cycles in OECD countries after World War II were generally more restrained than the business cycles. This was particularly true during the Golden Age of Capitalism, in this period, the economic cycle – at least the problem of depressions – was twice declared dead. The first declaration was in the late 1960s, when the Phillips curve was seen as being able to steer the economy, this was followed by stagflation in the 1970s, which discredited the theory. The second declaration was in the early 2000s, following the stability, notably, in 2003, Robert Lucas, in his presidential address to the American Economic Association, declared that the central problem of depression-prevention been solved, for all practical purposes. Unfortunately, this was followed by the 2008–2012 global recession, various regions have experienced prolonged depressions, most dramatically the economic crisis in former Eastern Bloc countries following the end of the Soviet Union in 1991
Productivity describes various measures of the efficiency of production. A productivity measure is expressed as the ratio of output to inputs used in a production process, Productivity is a crucial factor in production performance of firms and nations. Productivity growth helps businesses to be more profitable, there are many different definitions of productivity and the choice among them depends on the purpose of the productivity measurement and/or data availability. Productivity measures that use one class of inputs or factors, in practice, measurement in production means measures of partial productivity. Interpreted correctly, these components are indicative of productivity development, and approximate the efficiency with which inputs are used in an economy to produce goods, productivity is only measured partially – or approximately. At the company level, typical partial productivity measures are such things as worker hours, before widespread use of computer networks, partial productivity was tracked in tabular form and with hand-drawn graphs.
Tabulating machines for data processing began being used in the 1920s and 1930s. By the late 1970s inexpensive computers allowed industrial operations to process control. Today data collection is largely computerized and almost any variable can be viewed graphically in real time or retrieved for selected time periods, in macroeconomics, a common partial productivity measure is labour productivity. Labour productivity is an indicator of several economic indicators as it offers a dynamic measure of economic growth, competitiveness. It is the measure of productivity which helps explain the principal economic foundations that are necessary for both economic growth and social development. In general labour productivity is equal to the ratio between a measure of volume and a measure of input use. This is done in order to avoid double-counting when an output of one firm is used as an input by another in the same measurement, in macroeconomics the most well-known and used measure of value-added is the Gross Domestic Product or GDP.
It is widely used as a measure of the growth of nations. GDP is the income available for paying capital costs, labor compensation, some economists instead use gross value added, there is normally a strong correlation between GDP and GVA. The measure of input use reflects the time and skills of the workforce, denominator of the ratio of labour productivity, the input measure is the most important factor that influences the measure of labour productivity. Labour input is measured either by the number of hours worked of all persons employed or total employment. There are both advantages and disadvantages associated with the different input measures that are used in the calculation of labour productivity, the quality of hours-worked estimates is not always clear
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time resulting in a loss of value of currency. When the price rises, each unit of currency buys fewer goods. Consequently, inflation reflects a reduction in the power per unit of money – a loss of real value in the medium of exchange. A chief measure of inflation is the inflation rate, the annualized percentage change in a general price index, usually the consumer price index. The opposite of inflation is deflation, Inflation affects economies in various positive and negative ways. Economists generally believe that high rates of inflation and hyperinflation are caused by a growth of the money supply. However, money supply growth does not necessarily cause inflation, some economists maintain that under the conditions of a liquidity trap, large monetary injections are like pushing on a string. Views on which factors determine low to moderate rates of inflation are more varied, low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities.
However, the view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth. Today, most economists favor a low and steady rate of inflation, the task of keeping the rate of inflation low and stable is usually given to monetary authorities. Rapid increases in quantity of the money or in the money supply have occurred in many different societies throughout history. By diluting the gold with other metals, the government could issue more coins without needing to increase the amount of used to make them. When the cost of each coin is lowered in this way and this practice would increase the money supply but at the same time the relative value of each coin would be lowered. As the relative value of the coins becomes lower, consumers would need to give more coins in exchange for the same goods and these goods and services would experience a price increase as the value of each coin is reduced. Song Dynasty China introduced the practice of printing paper money in order to create fiat currency, during the Mongol Yuan Dynasty, the government spent a great deal of money fighting costly wars, and reacted by printing more money, leading to inflation.
Fearing the inflation that plagued the Yuan dynasty, the Ming Dynasty initially rejected the use of paper money, large infusions of gold or silver into an economy led to inflation. This was largely caused by the influx of gold and silver from the New World into Habsburg Spain. The silver spread throughout a previously cash-starved Europe and caused widespread inflation, demographic factors contributed to upward pressure on prices, with European population growth after depopulation caused by the Black Death pandemic
Personal Responsibility and Work Opportunity Act
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 is a United States federal law considered to be a major welfare reform. The bill was a cornerstone of the Republican Contract with America and was authored by Rep. E. Clay Shaw, President Bill Clinton signed PRWORA into law on August 22,1996, fulfilling his 1992 campaign promise to end welfare as we have come to know it. PRWORA instituted Temporary Assistance for Needy Families, which became effective July 1,1997, TANF replaced the Aid to Families with Dependent Children program—which had been in effect since 1935—and supplanted the Job Opportunities and Basic Skills Training program of 1988. The law was heralded as a reassertion of Americas work ethic by the U. S. Chamber of Commerce, TANF was reauthorized in the Deficit Reduction Act of 2005. AFDC caseloads increased dramatically from the 1930s to the 1960s as restrictions on the availability of support to poor families were reduced. Under the Social Security Act of 1935, federal funds only covered part of relief costs, more permissive Northern laws were tested during the Great Migration between 1940 and 1970 in which millions of people migrated from the agricultural South to the more industrial North.
Additionally, all able-bodied adults without children and two-parent families were originally disqualified from obtaining AFDC funds, court rulings during the Civil Rights Movement struck down many of these regulations, creating new categories of people eligible for relief. Community organizations, such as the National Welfare Rights Organization, distributed informational packets informing citizens of their ability to receive government assistance, between 1936 and 1969, the number of families receiving support increased from 162,000 to 1,875,000. After 1970, federal funding for the program lagged behind inflation, between 1970 and 1994, typical benefits for a family of three fell 47% after adjusting for inflation. The legislation was designed to increase labor market participation among public assistance recipients and this represented a major departure from the protectionist legacy institutionalized in U. S. social welfare policy from the inception of mothers pensions beginning in the early 19th century.
As such, the message regarding womens roles was that full-time mothering was a luxury reserved only for people who could afford it. The idea that the poor had become too dependent upon public assistance encouraged the act. The idea was that those who were on welfare for many years lost any initiative to find jobs and those on welfare realized that taking up a job would mean not only losing benefits but incur child care and clothing costs. Their new jobs probably would not pay well or include health insurance, there are many reasons welfare recipients would feel discouraged from working. In the 1980s, AFDC came under increasing criticism for the programs alleged ineffectiveness. While acknowledging the need for a safety net, Democrats often invoked the culture of poverty argument. Proponents of the bill argued that welfare recipients were trapped in a cycle of poverty, highlighting instances of welfare fraud, conservatives often referred to the system as a welfare trap and pledged to dismantle the welfare state.
Ronald Reagans oft-repeated story of a queen from Chicagos South Side became part of a larger discourse on welfare reform
Celtic Tiger is a term referring to the economy of the Republic of Ireland from the mid-1990s to the mid-2000s, a period of rapid real economic growth fuelled by foreign direct investment. The boom was destroyed by a subsequent property bubble which rendered the real economy uncompetitive, at the start of the 1990s, Ireland was a poor country by West European standards, with high poverty, unemployment and low growth. The Irish economy expanded at a rate of 9. 9% during the following decade until 2008. Irelands rapid growth has been described as a example of a Western country to match the growth of East Asian nations. The economy underwent a reversal from 2008, hit hard by the European economic crisis, with GDP contracting by 14%. A report from March 2011 said that Irelands per capita income fell back to pre-growth 1990s levels, since 2014 Ireland has been slowly recovering. The colloquial term Celtic Tiger has been used to refer to the country itself, the first recorded use of the phrase is in a 1994 Morgan Stanley report by Kevin Gardiner.
The term refers to Irelands similarity to the East Asian Tigers, Hong Kong, South Korea, and Taiwan during their periods of rapid growth in the early 1960s and late 1990s. An Tíogar Ceilteach, the Irish language version of the term, appears in the official database and has been used regularly in government. The Celtic Tiger period has been called The Boom or Irelands Economic Miracle, during that time, the country experienced a period of economic growth that transformed it from one of Western Europes poorer countries into one of its wealthiest. By mid-2007, in the wake of the global financial crisis. The entire Irish episode will be studied internationally in years to come as an example of how not to do things, historian Richard Aldous stated the Celtic Tiger has now gone the way of the dodo. In early 2008, many commentators thought a soft landing was likely, in February 2010, a report by Davy Research concluded that Ireland had largely wasted” its years of high income during the boom, with private enterprise investing its wealth in the wrong places.
From 1995 to 2000, GDP growth rate ranged between 7.8 and 11. 5%, it slowed to between 4.4 and 6. 5% from 2001 to 2007. During that period, the Irish GDP per capita rose dramatically to equal, eventually surpass, that of all but one state in Western Europe. Although GDP does not represent the standard of living, and the GNP remained lower than the GDP, in 2007, many economists credit Irelands growth to a low corporate taxation rate. Since 1956, successive Irish governments have pursued low-taxation policies, since joining the EU in 1973, Ireland has received over €17 billion in EU Structural and Cohesion Funds. These are made up of the European Regional Development Fund and the European Social Fund and were used to increase investment in the education system and to build physical infrastructure
George H. W. Bush
George Herbert Walker Bush is an American politician who was the 41st President of the United States from 1989 to 1993 and the 43rd Vice President of the United States from 1981 to 1989. Republican Party, he was previously a congressman, and he is the oldest living former President and Vice President. Prior to his sons presidency, he was referred to as George Bush or President Bush. Bush was born in Milton, Massachusetts, to Prescott Bush and Dorothy Walker Bush. Following the attack on Pearl Harbor in 1941, Bush postponed his university studies, enlisted in the U. S. Navy on his 18th birthday and he served until the end of the war, attended Yale University. Graduating in 1948, he moved his family to West Texas and entered the oil business, Bush became involved in politics soon after founding his own oil company, serving as a member of the House of Representatives and Director of Central Intelligence, among other positions. He failed to win the Republican nomination for President in 1980, but was chosen as a mate by party nominee Ronald Reagan.
During his tenure, Bush headed administration task forces on deregulation, in 1988, Bush ran a successful campaign to succeed Reagan as President, defeating Democratic opponent Michael Dukakis. Foreign policy drove the Bush presidency, military operations were conducted in Panama and the Persian Gulf, the Berlin Wall fell in 1989, and the Soviet Union dissolved two years later. Domestically, Bush reneged on a 1988 campaign promise and, after a struggle with Congress and his presidential library was dedicated in 1997, and he has been active—often alongside Bill Clinton—in various humanitarian activities. Besides being the 43rd president, his son George served as the 46th Governor of Texas and is one of only two other being John Quincy Adams—to be the son of a former president. His second son, Jeb Bush, served as the 43rd Governor of Florida, George Herbert Walker Bush was born at 173 Adams Street in Milton, Massachusetts, on June 12,1924, to Prescott Sheldon Bush and Dorothy Bush. The Bush family moved from Milton to Greenwich, shortly after his birth, growing up, his nickname was Poppy.
Bush began his education at the Greenwich Country Day School in Greenwich. Following the attack on Pearl Harbor in December 1941, Bush decided to join the US, Navy, so after graduating from Phillips Academy in 1942, he became a naval aviator at the age of 18. He was assigned to Torpedo Squadron as the officer in September 1943. The following year, his squadron was based on USS San Jacinto as a member of Air Group 51, during this time, the task force was victorious in one of the largest air battles of World War II, the Battle of the Philippine Sea. After Bushs promotion to Lieutenant on August 1,1944, San Jacinto commenced operations against the Japanese in the Bonin Islands, Bush piloted one of four Grumman TBM Avenger aircraft from VT-51 that attacked the Japanese installations on Chichijima
Furthermore, mainstream economics claim that information technology and greater flexibility in working practices contribute to stability. During the mid-1980s the U. S. macroeconomic volatility was largely reduced and this phenomenon was called a great moderation by James Stock and Mark Watson in their 2002 paper, Has the Business Cycle Changed and Why. It was brought to the attention of the public by Ben Bernanke in a speech at the 2004 meetings of the Eastern Economic Association. Taylor, this allowed the Federal Reserve to abandon discretionary macroeconomic policy by the US Federal government to set new goals that would benefit the economy. Through systematic monetary policy free from fiscal concerns, structured macroeconomic policy helped usher in the Great Moderation, the Federal Reserve’s change in communicating its monetary policy plans contributed to the Great Moderation. The increased transparency could result in more effective monetary policy, following the Taylor Principle means less policy instability, which should reduce macroeconomic volatility.
The resulting economic stabilization policies come in two forms, business cycle stabilization and crisis stabilization, a business cycle refers to the economic activity and trade fluctuations that occur all across the economy over time. These fluctuations occasionally reach extreme levels, as demonstrated by the Great Inflation, designed for keeping the economy on an even keel, the Taylor Principle is countercyclical in nature and a very simple rule does a good job of describing Federal Reserve interest-rate decisions. Business cycle stabilization introduces more systematic monetary policies that reduce the fluctuations, the US economic history is rife with unwelcomed financial crises. Frederic S. Monetary policymakers have turned their attention to financial stability in order to mitigate the damage incurred during shocks, crises are typically unpredictable and uncontrollable due to the vast number of factors involved, which prompts the necessity for improved crisis stabilization policy. The Federal Reserve’s quick response to stabilizing crises was made due to the improvement of monetary policy.
A contributing factor to the Great Moderation is an improved and stabilized economic structure, there are three primary reasons for an economic structural change that occurred right before the Great Moderation. The first was a change in economic structure that shifted away from manufacturing, the Sources of the Great Moderation by Bruno Coric supports the claim of drastic labor market changes, noting a high increase in temporary workers, part time workers and overtime hours. In addition to a change in the market, there were behavioral changes in how corporations managed their inventories. With improved sales forecasting and inventory management, inventory costs became much less volatile, advances in information technology and communications increased corporation efficiency. The improvement in technology changed the way corporations managed their resources as information became much more readily available to them with inventions such as the barcode. Last, information technology introduced the adoption of the just-in-time inventory practices, however and Watson used a four variable vector autoregression model to analyze output volatility and concluded that stability increased due to economic good luck.
Stock and Watson believed that it was pure luck that the economy didn’t react violently to the economic shocks during the Great Moderation, while there were numerous economic shocks, there is very little evidence that these shocks are as large as prior economic shocks
The Great Depression was a severe worldwide economic depression that took place during the 1930s. The timing of the Great Depression varied across nations, in most countries it started in 1929 and it was the longest and most widespread depression of the 20th century. In the 21st century, the Great Depression is commonly used as an example of how far the economy can decline. The depression originated in the United States, after a fall in stock prices that began around September 4,1929. Between 1929 and 1932, worldwide GDP fell by an estimated 15%, by comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession. Some economies started to recover by the mid-1930s, however, in many countries, the negative effects of the Great Depression lasted until the beginning of World War II. The Great Depression had devastating effects in both rich and poor. Personal income, tax revenue and prices dropped, while international trade plunged by more than 50%, unemployment in the U. S. rose to 25% and in some countries rose as high as 33%.
Cities all around the world were hit hard, especially dependent on heavy industry. Construction was virtually halted in many countries, farming communities and rural areas suffered as crop prices fell by about 60%. Facing plummeting demand with few sources of jobs, areas dependent on primary sector industries such as mining and logging suffered the most. Even after the Wall Street Crash of 1929 optimism persisted for some time, john D. Rockefeller said These are days when many are discouraged. In the 93 years of my life, depressions have come, prosperity has always returned and will again. The stock market turned upward in early 1930, returning to early 1929 levels by April and this was still almost 30% below the peak of September 1929. Together and business spent more in the first half of 1930 than in the period of the previous year. On the other hand, many of whom had suffered losses in the stock market the previous year. In addition, beginning in the mid-1930s, a severe drought ravaged the agricultural heartland of the U. S, by mid-1930, interest rates had dropped to low levels, but expected deflation and the continuing reluctance of people to borrow meant that consumer spending and investment were depressed.
By May 1930, automobile sales had declined to below the levels of 1928, prices in general began to decline, although wages held steady in 1930
The term is modeled on Four Asian Tigers, Tatra Tiger and Celtic Tiger, which were used to describe the economic boom periods in parts of Asia and Ireland, respectively. Between 2000 and 2007, the Baltic Tiger states had the highest growth rates in Europe, in 2006, for example, Estonia grew by 10. 3% in gross domestic product, while Latvia grew by 11. 9% and Lithuania by 7. 5%. All three countries by February 2006 saw their rates of unemployment falling below average EU values, Estonia is among the ten most liberal economies in the world and in 2006 switched from being classified as an upper-middle income economy to a high-income economy by the World Bank. All three countries joined the European Union in May 2004, Estonia adopted the Euro in January 2011, Latvia in 2014 and Lithuania entered the Eurozone in 2015. In 2008, the financial crisis triggered the collapse of the Baltic property markets. In 2008, Latvias GDP shrank by −4. 6% and Estonias −3. 6% while Lithuanias slowed to 3. 0%. As the crisis swept across Eastern and Central Europe the economic reversal intensified, Estonias GDP dropped by -16.
2% year-on-year, Latvia’s by −19. 6%, by mid-2009, all three countries experienced one of the deepest recessions in the world. Estonias GDP grew by 8. 3% in 2011, Lithuanias GDP grew by 5. 9%, in international dollars, at purchasing power parity. Numbers in brackets show the respective countrys GDP per capita as a percentage of the eurozone average, Economies of the Baltic Tigers, Economy of Estonia Economy of Latvia Economy of Lithuania Other Tigers Four Asian Tigers Tiger Cub Economies Celtic Tiger Tatra Tiger Gulf Tiger
The Nasdaq Stock Market is an American stock exchange. It is the second-largest exchange in the world by market capitalization, the exchange platform is owned by Nasdaq, Inc. which owns the Nasdaq Nordic and Nasdaq Baltic stock market network and several other US stock and options exchanges. When it was founded, NASDAQ stood for the acronym of National Association of Securities Dealers Automated Quotations, NASDAQ was founded in 1971 by the National Association of Securities Dealers, which divested itself of NASDAQ in a series of sales in 2000 and 2001. The Nasdaq Stock Market is owned and operated by Nasdaq, Inc. the stocks of which were listed on its own stock exchange marketing July 2,2002, when the Nasdaq Stock Market began trading on February 8,1971, it was the worlds first electronic stock market. At first, it was merely a system and did not provide a way to perform electronic trades. The Nasdaq Stock Market helped lower the spread but was unpopular among brokerages which made much of their money on the spread.
As late as 1987, the NASDAQ exchange was still referred to as OTC in media. Over the years, the Nasdaq Stock Market became more of a market by adding trade and volume reporting. The Nasdaq Stock Market attracted new companies such as Microsoft, Cisco and Dell. Its main index is the NASDAQ Composite, which has published since its inception. In 1992, the Nasdaq Stock Market joined with the London Stock Exchange to form the first intercontinental linkage of securities markets, the National Association of Securities Dealers spun off the Nasdaq Stock Market in 2000 to form a publicly traded company. In 2006, the status of the Nasdaq Stock Market was changed from a market to a licensed national securities exchange. In 2007, Nasdaq merged with OMX, an exchange operator in the Nordic countries, expanded its global footprint. NASDAQ OMX could be looking to acquire the American exchanges cash equities business, at the time, NYSE Euronext’s market value was $9.75 billion. Nasdaq was valued at $5.78 billion, while ICE was valued at $9.45 billion.
Late in the month, Nasdaq was reported to be considering asking either ICE or the Chicago Mercantile Exchange to join in what would probably have to be, if it proceeded, an $11–12 billion counterbid. The European Association of Securities Dealers Automatic Quotation System was founded as a European equivalent to the Nasdaq Stock Market and it was purchased by NASDAQ in 2001 and became NASDAQ Europe. Operations were shut down, however, as a result of the burst of the dot-com bubble, in 2007, NASDAQ Europe was revived as Equiduct, and is currently operating under Börse Berlin
A jobless recovery or jobless growth is an economic phenomenon in which a macroeconomy experiences growth while maintaining or decreasing its level of employment. The term was coined by the economist Nick Perna in the early 1990s, economists are still divided about the causes and cures of a jobless recovery, some argue that increased productivity through automation has allowed economic growth without reducing unemployment. Some have argued that the recent lack of job creation in the United States is due to increased industrial consolidation and growth of monopoly or oligopoly power. The argument is twofold, small businesses create most American jobs, in addition to employment growth, population growth must be considered concerning the perception of jobless recoveries. Immigrants and new entrants to the workforce will often accept lower wages, the U. S. Bureau of Labor Statistics does not offer data-sets isolated to the working-age population. Including retirement age individuals in most BLS data-sets may tend to obfuscate the analysis of employment creation in relation to population growth.
Additionally, incorrect assumptions about the term, Labor force, might occur when reading BLS publications, millions of persons are not included within the official definition. The Labor force, as defined by the BLS, is a definition of those officially unemployed. The following table and included chart depicts year-to-year employment growth in comparison to growth for those persons under 65 years of age. As such, baby boomer retirements are removed from the data as a factor for consideration, the working-age population is determined by subtracting those age 65 and over from the Civilian noninstitutional population and Employment Levels respectively. When examined, by decade, the first decade of the 2000s, deindustrialization Involuntary unemployment Moving the goalposts Exploding Productivity Growth, Context and Implications