Editing Business cycle (section)

=== Occurrence ===
[[File:Kondratieff Wave.svg|thumb|upright=2.05|A simplified [[Kondratiev wave]], with the theory that [[productivity]] enhancing innovations drive waves of economic growth]]
There were great increases in [[Productivity improving technologies (historical)|productivity]], industrial production and real per capita product throughout the period from 1870 to 1890 that included the [[Long Depression]] and two other recessions.<ref>{{cite book|title=Recent Economic Changes and Their Effect on Production and Distribution of Wealth and Well-Being of Society|last=Wells|first=David A.|year=1890 |publisher= D. Appleton and Co.|location= New York|isbn= 978-0543724748 |url= https://archive.org/details/recenteconomicc01wellgoog |quote=RECENT ECONOMIC CHANGES AND THEIR EFFECT ON DISTRIBUTION OF WEALTH AND WELL BEING OF SOCIETY WELLS.}}</ref><ref name="Rothbard">{{cite book|title=History of Money and Banking in the United States|last=Rothbard|first=Murray|year=2002|publisher=Ludwig Von Mises Inst|isbn=978-0945466338|url=https://mises.org/books/historyofmoney.pdf|url-status=live|archive-url=https://web.archive.org/web/20140210225721/http://mises.org/books/historyofmoney.pdf|archive-date=2014-02-10}}</ref> There were also significant increases in productivity in the years leading up to the Great Depression.  Both the Long and Great Depressions were characterized by overcapacity and market saturation.<ref name="Wells1890">{{cite book|title=Recent Economic Changes and Their Effect on Production and Distribution of Wealth and Well-Being of Society|last=Wells|first=David A.|year=1890 |publisher= D. Appleton and Co.|location= New York|isbn= 978-0543724748 |url= https://archive.org/details/recenteconomicc01wellgoog |quote=RECENT ECONOMIC CHANGES AND THEIR EFFECT ON DISTRIBUTION OF WEALTH AND WELL BEING OF SOCIETY WELLS.}}Opening line of the Preface.</ref><ref>{{cite book |title=Mass Production, the Stock Market Crash and the Great Depression |last=Beaudreau |first=Bernard C. |year=1996 |publisher=Authors Choice Press|location=New York, Lincoln, Shanghi }}</ref>

Over the period since the Industrial Revolution, technological progress has had a much larger effect on the economy than any fluctuations in credit or debt, the primary exception being the Great Depression, which caused a multi-year steep economic decline. The effect of technological progress can be seen by the purchasing power of an average hour's work, which has grown from $3 in 1900 to $22 in 1990, measured in 2010 dollars.<ref name="Legergott1993">{{cite book |title= Pursuing Happiness: American Consumers in the Twentieth Century |last= Lebergott |first= Stanley |year= 1993 |publisher= Princeton University Press |location= Princeton, NJ |isbn= 978-0691043227 |pages= a:Adapted from Fig. 9.1 |url= https://archive.org/details/pursuinghappines0000lebe |url-access= registration }}</ref>  There were similar increases in real wages during the 19th century.  (''See: [[Productivity improving technologies (historical)]]''.)  A table of innovations and long cycles can be seen at: {{slink|Kondratiev wave|Modern modifications of Kondratiev theory}}. Since surprising news in the economy, which has a random aspect, impact the state of the business cycle, any corresponding descriptions must have a random part at its root that motivates the use of statistical frameworks in this area.

There were frequent crises in Europe and America in the 19th and first half of the 20th century, specifically the period 1815–1939. This period started from the end of the [[Napoleonic wars]] in 1815, which was immediately followed by the [[Post-Napoleonic depression]] in the [[United Kingdom]] (1815–1830), and culminated in the [[Great Depression]] of 1929–1939, which led into [[World War II]]. See [[Financial crisis#19th century|Financial crisis: 19th century]] for listing and details. The first of these crises not associated with a war was the [[Panic of 1825]].<ref>{{Cite journal|last=Shallat|first=Todd|date=February 2004|title=The Rhine: An Eco-Biography, 1815–2000|journal=The Public Historian|volume=26|issue=1|pages=163–164|doi=10.1525/tph.2004.26.1.163|issn=0272-3433}}</ref>

Business cycles in [[OECD]] countries after World War II were generally more restrained than the earlier business cycles. This was particularly true during the [[Golden Age of Capitalism]] (1945/50–1970s), and the period 1945–2008 did not experience a global downturn until the [[Late-2000s recession]].<ref>{{cite web |url=http://www.ici.org/pdf/per02-02.pdf |title=Investment company institute – Perspective |access-date=2013-08-01 |url-status=live |archive-url=https://web.archive.org/web/20130313190606/http://ici.org/pdf/per02-02.pdf |archive-date=2013-03-13 }} Stock Market Cycles 1942–1995</ref> Economic stabilization policy using [[fiscal policy]] and [[monetary policy]] appeared to have dampened the worst excesses of business cycles, and [[automatic stabilization]] due to the aspects of the [[government]]'s [[budget]] also helped mitigate the cycle even without conscious action by policy-makers.<ref>{{Citation|title=Business Cycles versus Boom-and-Bust Cycles|work=Economic and Financial Crises|year=2015|publisher=Palgrave Macmillan|doi=10.1057/9781137461902.0009|doi-broken-date=4 April 2025 |isbn=978-1-137-46190-2}}</ref>

In this period, the economic cycle – at least the problem of depressions – was twice declared dead. The first declaration was in the late 1960s, when the [[Phillips curve]] was seen as being able to steer the economy. However, this was followed by [[stagflation]] in the 1970s, which discredited the theory. The second declaration was in the early 2000s, following the stability and growth in the 1980s and 1990s in what came to be known as the [[Great Moderation]]. Notably, in 2003, [[Robert Lucas, Jr.|Robert Lucas Jr.]], in his presidential address to the [[American Economic Association]], declared that the "central problem of depression-prevention [has] been solved, for all practical purposes."<ref>Fighting Off Depression, New York Times, {{cite news |url=https://www.nytimes.com/2009/01/05/opinion/05krugman.html |title=Opinion &#124; Fighting off Depression |newspaper=The New York Times |date=5 January 2009 |access-date=2009-08-15 |url-status=live |archive-url=https://web.archive.org/web/20110430040012/http://www.nytimes.com/2009/01/05/opinion/05krugman.html |archive-date=2011-04-30 |last1=Krugman |first1=Paul }}</ref>

Various regions have experienced prolonged [[depression (economics)|depressions]], most dramatically the economic crisis in former [[Eastern Bloc]] countries following the end of the [[Soviet Union]] in 1991. For several of these countries the period 1989–2010 has been an ongoing depression, with real income still lower than in 1989.<ref>{{Cite journal|last1=Smith|first1=Adrian|last2=Swain|first2=Adam |s2cid=154302466 |date=January 2010|title=The Global Economic Crisis, Eastern Europe, and the Former Soviet Union: Models of Development and the Contradictions of Internationalization|journal=Eurasian Geography and Economics|volume=51|issue=1|pages=1–34|doi=10.2747/1539-7216.51.1.1|issn=1538-7216}}</ref>