50, Or 100 years.

c) Cyclical impact

The business cycle is pervasive; it is felt in virtually every nook and cranny of the economy. Yet

we must keep in mind that various individuals and various segments of the economy are effected in

different ways and in different degrees by the business cycle. In so far as production and employment

are concerned, those industries producing capital goods and consumer durables are typically

hit hardest by recession.

Output and employment in nondurable consumer goods industries are usually less sensitive to

the cycle. Industries and workers producing heavy capital goods, farm implements, automobiles,

refrigerators, gas ranges, and similar products bear the brunt of bad times.

Conversely, these “hard goods” industries seem to be stimulated most by expansion.

All sectors of the economy are affected by the business cycle, but in varying ways and degrees.

The cycle has greater output and employment ramifications in the capital goods and durable consumer

goods industries than it does in nondurable goods industries. Over the cycle, price fluctuations

are greater in competitive than in monopolistic industries.

This is all easy to explain.

Within limits, the purchase of “hard goods” is postponable. As the economy slips into bad

times, producers frequently forestall the acquisition of more modem production facilities and the

construction of new plants. As a result, investment in capital goods will decline sharply. When

recession rolls around and the family budget must be trimmed, it is likely that plans for the purchases

of durables such as major appliances and automobiles will first feel the ax.

The impact of a fall in demand centers primarily upon production and employment. Food and

clothing — consumer nondurables — are a different story. A family must eat and must clothe itself!

d) The criteria characterizing the medium-term cycle:

• the duration of the cycle and its individual phases

• the epicentre of the crisis

• the scope of fluctuations of base values of industrial production, volume of foreign trade, dynamics

of prices, investments, stock of goods, etc.

By one of these values one cannot determine in what phase of the cycle the economy of this or

that nation (country) is to be found. Only by taking into account the sum of values one may correctly

estimate the state of a nation’s economy and the phase of the cycle.

e) The trends of modern cycles of business activity:

• the reduction of duration of the business cycle (from 11—12 years to 5—10 years)

• the decrease of depth and duration of the phase of the crisis

• the shift of the epicentre of the onset of crisis occurrences

• slow, gradual “creeping” into the crisis

• the synchronization of crises in developed countries

f) Business cycles of very long duration

Previously, the cyclic nature of the economy was interpreted in terms of medium-term cycles

only. In the 1970s, economists became interested in the so-called long waves theory named after

N. Kondratieff, the Russian economist, who made important contributions in the 1920s to the

study of long-term fluctuations. Kondratieff studied US, UK and French wholesale prices and