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- Recessions are part of the natural economic cycle and can be triggered by various factors, including financial crises, external shocks, high inflation rates or political uncertainty. Overcoming a recession often requires coordinated economic policy measures to stabilize the economy and lay the foundations for recovery.
www.munich-business-school.de/en/l/business-studies-dictionary/financial-knowledge/recession
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Mar 1, 2023 · What constitutes a recession? Two quarters of negative real GDP growth? The NBER Business Cycle Dating Committee has a more nuanced way of determining what a recession is. This essay discusses where recessions come from, how they are determined, and how they end.
- What Are Recessions?
- Causes of Recessions
- Alternative Explanation
- Recessions Are (Probably) Inevitable
- The Bottom Line
“Recession” is the term given to an economic period marked by negative real growth, declining output, depressed prices, and rising unemployment, which often follows a period of notably strong economic growth as measured by these same variables. Recessions are characterized by an unusual, simultaneous, and large grouping of business errors, which so...
The key issue as to whether this process of growth-recession-recovery is inevitable is: What causes the cluster of business errors to occur? Why can businesses not continue to grow and asset prices continue to rise indefinitely? Economists have developed numerous explanations for these clusters of business failures over the years. Some rely on psyc...
Another alternative explanation for recessions comes from Austrian Business Cycle Theory (ABCT). This theory takes a deeper look at many of the factors discussed above. It focuses on how central banking and monetary policy interact with real economic events and the psychology and incentives faced by investors, producers, and consumers in the econom...
In the end, once the process of the artificial boom in the economy by the issuance of credit is set in motion, then the ensuing bust and recession are indeed inevitable. But this does not mean that recessions are always and generally inevitable, other than after episodes of inappropriate creation of money and credit. Recessions are not logically in...
Recessions, or economic contractions, are likely a function of the usual operations of a modern capitalistic economy. Unfortunately, recessions can lead to high levels of unemployment, lower asset prices, investment losses, and firms going out of business. But they also show us something very important about how modern economies work—namely that un...
May 3, 2022 · Recessions are a normal part of the business cycle. There are periods of economic growth and periods of economic slowdown and it’s all part of the same cycle. The recession in 2020...
- Erika Giovanetti
Dec 19, 2023 · Contraction. A correction occurs when growth slows, employment falls, and prices stagnate. As demand decreases, businesses may not immediately adjust production levels, leading to oversaturated...
Mar 9, 2023 · The natural state of the economy is to growth, recessions are just part of the cycle. Since last summer, recession chatter has reached a fevered pitch. More than half of economists surveyed by Bloomberg are predicting that a recession is imminent over the next year.
Sep 17, 2019 · Plainly put, the business cycle is how economists refer to the inevitable ups—expansions— and downs—contractions, or recessions—of economic activity over time. But determining exactly when a cycle ends and when a new one begins is often not clear, even to experts, until well after the fact, economists say.
Most economists view business cycle fluctuations—contractions and expansions in economic output—as being driven by random forces—unforeseen shocks or mistakes, as Bernstein writes. As I will show, a model in which purely random events interact with economic forces can resemble U.S. business cycles. This
