Economics Dictionary of ArgumentsHome
| |||
|
| |||
| Economic cycle: Economic cycles are recurrent fluctuations in economic activity characterized by alternating periods of expansion and contraction. These cycles include phases of growth (expansions) and decline (contractions), encompassing fluctuations in production, employment, investment, and consumer spending. See also Economy, Markets, Consumption. _____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
| Author | Concept | Summary/Quotes | Sources |
|---|---|---|---|
|
Friedrich A. von Hayek on Economic Cycle - Dictionary of Arguments
Boudreaux II 60 Economic cycles/demand/ Hayek/Boudreaux: Business people know that their profits rise and fall with rises and falls in the demand for the products they sell. If more paying customers are streaming through the doors, times are good. Fewer customers, in contrast, mean worsening times - and, for many firms, even bankruptcy. Likewise for workers. They understand that the greater the demand for their employers' outputs, the greater the demand for their labour services. When business is booming, their jobs are more secure and their wages rise. When business is bad, jobs are less secure and wages stagnate. Demand: This understanding by business people and workers of the importance of high demand in their industries and firms is correct. Problem: But (…) our roles as producers ((s) workers, wage earners) can mislead us into making mistaken conclusions about the larger economy. One such mistaken conclusion about the larger economy is that economic downturns – recessions - are caused by too little overall demand. A follow-up mistaken conclusion is that the appropriate cure for recessions is a set of government policies that increase demand. Recession: Because an economy-wide recession affects nearly all firms and industries and not just a few, the demand that is said to be too Iow during recessions is called "aggregate demand." Aggregate demand is the overall demand in an economy for all goods and services. >Recession, >Demand/Keynes. Boudreaux II 64 Economic cycles/Hayek/Boudreaux: Production: (…) producers will have incentives to “listen” to (…) [relative] prices. The reason is that producers earn higher profits by expanding production of outputs whose prices are rising. Likewise, producers avoid losses by producing fewer of those outputs whose prices are falling. >Relative prices/Hayek, >Knowledge/Hayek, >Price, >Price theory. Boudreaux II 66 Economic cycles: adjustments in production activities (…), are not instantaneous. They take time. Unemployment: Unemployment rises during the time it takes for these adjustments to be made. Workers in industries with unsold inventories are laid off, and time is required for them to find employment elsewhere. Even industries that expand in response to more accurate prices typically require some time to rearrange their production plans and facilities in order to make profitable the hiring of new workers. The time it takes for the firms to adjust away from the production plans they made when prices were inaccurate is time during which unusually large numbers of workers are unemployed._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014 |
||
Authors A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Concepts A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
