Business Cycle Fluctuations

By

Priyanka P Wagaskar

TABLE OF CONTENTS



CHAPTER 01: INTRODUCTION1

1.1. Background of the Study1

1.2. Aims and Objectives1

CHAPTER 02: LITERATURE REVIEW2

2.1. Introduction2

2.2. Business Cycle Phases2

2.3. Theories Cycles Currently Prevailing (estou aqui)3

2.4. Empirical Research on Business Cycle Fluctuations5

CHAPTER 03: RESEARCH METHODOLOGY7

3.1. Advantages and Disadvantages of Secondary Research7

REFERENCES8

CHAPTER 01: INTRODUCTION

1.1. Background of the Study

A business cycle occurrs at about the same time in many economic activities, followed by similarly general recessions, contractions, and revivals which merge into the expansion phase of the next cycle; this sequence of changes is recurrent but not periodic; in duration business cycles vary from more than one year to ten to twelve years; they are not divisible in to shorter cycles of similar character with amplitudes approximating their own.

According to Domowitz and Petersen (1986) there is a long intellectual history of the empirical analysis of business cycles (Domowitz and Petersen, 1986 p.17). The classical techniques of business cycle analysis were developed by researchers at the National Bureau of Economic Research.

1.2. Aims and Objectives

The aim of this research study is to explore the business cycle fluctuations in the United Kingdom.

To highlight the concept of business cycle fluctuations

To explore the history of business cycle fluctuations.

To empirically assess the business cycle fluctuations in the United Kingdom.

CHAPTER 02: LITERATURE REVIEW

2.1. Introduction

This chapter provides relevant literature that is available on business fluctuations cycle and discusses theoretical and empirical points regarding the business fluctuations cycle.

2.2. Business Cycle Phases

Economic fluctuations differ from country to country, not only in its regularity, but also in its size and causes Small countries heavily exposed to international trade, show different characteristics compared to large countries, less dependent on the exchange. Additionally, countries dependent on commodity exports are subject to different types of shocks that exporting manufactures. And besides, the business cycle does not always occur in a manner so clear and consistent even in a country. It is possible to identify and anticipate its phases (Bernanke and Gertler, 1989, p. 14).

Usually, the literature cited four phases of a cycle:

Rise: production and income increase and decreases the level of unemployment and increase wages and benefits. Increase investment. It also increases consumer confidence and optimism in general (Chevalier and Scharfstein, 1995, p. 390).

Recession: The increased use of resources (labour, capital, natural resources, commodities, etc.) that occurs during the boom, usually an increase in price levels. Additionally, bubbles tend to occur in capital markets or real estate. There may come a time when output growth rates decrease, e.g. due to saturation of demand for increased prices, causing a change in expectations generally bring with them a decline in growth rates and investment.

Depression after a period of stagnation: it has been observed that the levels of investment, income as well as the production levels decrease. During a recession, by lowering investment and output growth rate, it may happen that certain sectors will be heavily affected. This may be accompanied by falling interest rates and financial asset values (Cetorelli and Gambera, 2001, p. 617). 

Recovery: there comes a point where the prices fall and the income generated from the investments is less. At this time, several ...