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Cyclism as a form of combining stability and instability in economic development

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  • O.BANDURA

Abstract

It has been empirically proven that the business cycle dating model is inextricably linked with defining the boundaries of periods of stable and instable economic development. The author compares the methods of dating US economic cycles in accordance with the model of the National Bureau of Economic Research (NBER) and the proposed in this article CMI model of cycles. Shown certain competitive advantages of dating media cycles based on the CMI model against the NBER model, in which case there may be periods of ambiguity in dating. The article demonstrates that the use of the author's media model for dating business cycles avoids the ambiguities that arise in the official dating of recessions based on the classic US NBER model of cycles. The dating of US business cycles with the CMI model revealed a cumulative effect of reducing unemployment, which explains that even with relatively small economic growth, which, however, lasts for a sufficiently long period of time, a significant overall reduction in the unemployment rate can be achieved. It is shown that the proposed equation to determine the cumulative market failure index (?Ð) would allow simultaneous control and management of the dynamics of all three major macroeconomic indicators - employment, inflation and economic growth, which can be applied in the practice of regulating economic dynamics as a quantitative criterion of stability level. The equation for (?Ð) reflects the current balance between inflation, employment and economic growth for each moment of real (calendar) time, which shapes a unique configuration of the economic cycle. Shown that the CMI model of economic cycle provides tools to achieve synergies from different types of regulation to maximize economic growth and employment at acceptable inflation by increasing the length of the stability period while reducing the magnitude of cumulative market failure.

Suggested Citation

  • O.Bandura, 2019. "Cyclism as a form of combining stability and instability in economic development," Economy and Forecasting, Valeriy Heyets, issue 4, pages 7-23.
    • Handle: RePEc:eip:journl:y:2019:i:4:p:7-23
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    1. Peter Temin, 1998. "Causes of American business cycles: an essay in economic historiography," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 42(Jun), pages 37-64.
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