Economic cycle

(redirected from Boom-Bust Cycles)

Economic Cycle

The period of time during which an economy evolves from a state of health to fragility to recession to recovery and back to health. Every capitalist economy has cycles to a greater or lesser extent. However, regulations may be designed to curtail them (or, more accurately, to attempt to maximize the good times while preventing the bad times); this is rarely successful. Factors affecting economic cycles include the level of inflation, the availability of capital, natural disasters, and political events. Some industries are considered countercyclical, meaning that demand for their products remains relatively constant regardless of economic circumstances; some even do better in recessions. Other industries, mainly those considered luxuries, are greatly dependent on economic cycles. An economic cycle is often colloquially called a boom-and-bust cycle.

Economic cycle.

An economic cycle is a period during which a country's economy moves from strength to weakness and back to strength.

This pattern repeats itself regularly, though not on a fixed schedule. The length of the cycle isn't predictable either and may be measured in months or in years.

The cycle is driven by many forces -- including inflation, the money supply, domestic and international politics, and natural events.

In developed countries, the central bank uses its power to influence interest rates and the money supply to prevent dramatic peaks and deep troughs, smoothing the cycle's highs and lows.

This up and down pattern influences all aspects of economic life, including the financial markets. Certain investments or categories of investment that thrive in one phase of the cycle may lose value in another. As a result, in evaluating an investment, you may want to look at how it has fared through a full economic cycle.

References in periodicals archive ?
Public seminar at the Museum of the Bank of Estonia TalTech researcher Rachatar Nilavongse to introduce a survey titled "House Price Expectations, Boom-Bust Cycles and Implications for Monetary Policy."
Second, it should be formed in such a way that the targeted growth process is not jeopardised by either the asset-market inflation or ensuing deflation (so-called boom-bust cycles), and does not result in the excessive indebtedness of individual sectors or even whole economies, thereby leading to the next crisis.
Deep structural reforms will help reduce Mongolias susceptibility to boom-bust cycles. Enhancing the fiscal rules framework is important to protect fiscal discipline in coming years.
The bank also said that such a development would lead to boom-bust cycles, sink house prices and weaken banks.
Continued government commitment to sensible macroeconomic policies to build up buffers and to reduce Mongolia's vulnerability to boom-bust cycles in the future will be important.
Launched today at the Human Capital Summit, the report, Pakistan@100: Shaping the Future, urges Pakistan to overcome its boom-bust cycles through a deep-rooted economic transformation.
The report urged Pakistan to overcome its boom-bust cycles through a deep-rooted economic transformation.
Launched on Monday at the Human Capital Summit in Islamabad, the report, Pakistan@100: Shaping the Future, urges Pakistan to overcome its boom-bust cycles through a deep-rooted economic transformation.
Launched Monday at the Human Capital Summit, the report, Pakistan@100: Shaping the Future, urges Pakistan to overcome its boom-bust cycles through a deep-rooted economic transformation.
Without a significant home-grown investor base, supported by futuristic policy initiatives and structural reforms, countries risk a return to the old boom-bust cycles of the 20th century.
Generation Wealth, 18, PS15.99 DOCUMENTARY filmmaker Lauren Greenfield explores how the boom-bust cycles of the global economy impact on our insatiable hunger for designer labels and material possessions.
Multiple boom-bust cycles have been observed in each of the last six decades.