Friday, May 23, 2014

A Definition of Business Cycles

Our traditional term for macroeconomic fluctuations - "business cycles" - doesn't really represent well how we think about them now.  Robert Solow provides a good definition:
“the business cycle” has become shorthand for the series of irregular, short-run, aggregative fluctuations of varying duration, magnitude, andprobablycausation that we call prosperity and recession.
That's from Solow's delightful 2007 review of Thomas McCraw's biography of Joseph Schumpeter, which I had the good fortune to stumble upon.

The NBER's somewhat mushy "official" definition is here.

No comments: