# 景氣循環
## learning objective
1. Define and describe the business cycle.
2. Summerize the history of the **American Business Cycle**
3. behavior of various variables over the course of the business cycle
4. AD-AS model to understand the effect of **various shocks**
5. 延伸閱讀

## Define and describe the BC(business cycle).
### background
* NBER National B E Research maintains the business cycle chronology
* research since 1920
* burns and mitchell

### five points about business model
1. BC, are fluctuations of ==aggregate economic activities==, not a specific variable
1. There are expansions and contractions.
1. comovement of economic variables regular and predictable.
1. recurrent but not periodic
1. persistent

business cycle are persistent
1. declines are followed by decline.
2. became of persistence, forecasting turing points is important
## Summerize the history of the American Business Cycle
* Recessions were common from 1865 to 1917
* contraction : 338 months
* expansion : 382 months

* Recessions were less common from 1865 to 1917
* contraction : 122 months
* expansion : 642 months
* longest contraction ws 65 months(Oct. 1873:arrow_right: Mar. 1879)

* Great Depression and WWII
1. Great Depression(GD) was the worst contraction
2. GDP :arrow_down: 30% from the peak to trough
3. u(unemployment rate) = 3% to 25%
4. banks failed stock market collapsed international trade was halted
5. GD contained two BC(1929~1937 1937~1945)
* 1937 u = 14%
* 1939 u = 17%
### America Business Cycle
1. Oil shock(1973)
* real GDP declined 3%
* u = 9%
* $\pi$ > 10%
2. 1981-1982 recession
* u > 11%
* $\pi$ 11% to 4%:arrow_down:
3. 1991-1992 2001 recession
* mild and short
4. long boom(1982~2001)
* with a brief recession(Jul 1990 ~ Mar 1991)
* volatility drop sharply
* long boom period include Great Moderation
5. Great Recession(2008) was longest and deepest recession after GD
* begin Dec. 2007
* started from a financial crisis
* u > 10% (since 1982)
* Fed reduced interest rate to near 0 ! ! !
* sluggish growth
### American business cycle less severe ?
1. volatility drop
2. Romer's paper about data quality
3. see the fig 8.2 on GDP growth rate
4. see rhe fig 8.3 on volatility
5. theories of reduced volatility
note : vertical was represents the standard deviation of growth rates.
## behavior of various variables over the course of the business cycle
### Do econmics expansion die of old age?

* All BC have features in common.
* behavior of economics variables can be viewed by
* direction
* timing

1. X = Direction of an econmics variable
2. Y = aggregate economic activities
* X relative to Y
* procyclical : y up and x up
* countercyclical : y up and x down
* acyclical : y up and x up or down

* timing of an economic variable（see sum10）
* leading variable : 領先
* coincident variable: 同時
* lagging variable: 落後
* fig 8.5 for cyclical of industrial production
* industrial production index is a basic indicator of economic activity
* shadow part present recession
* 
* see fig 8.6 for cyclical behavior of consumption and investment
* consumption and investment are procyclical
* consumption for
* non-durable goods
* services
* durable goods
* investment and durable goods are more volatile
* see fig 8.7 for cyclical behavior of civilianemployment
* see fig 8.8 for cyclical behavior of unemployment
* countercyclical and unclassified timing
* Job finding rate(jfr)
* $jfr=\frac{\text{＃of newly employment workers this month}}{\text{＃of unemployment workers last month}}$
* see fig 8.9
* jfr :arrow_up: in expansion
* jfr :arrow_down: in recession
* Job loss rate(jlr)
* $jlr=\frac{\text{＃of newly unemployment workers this month}}{\text{＃of employment workers last month}}$
* see fig 8.10
* jfr :arrow_down: in expansion
* jfr :arrow_up: in recession
* Small change in jlr may lead to larger changes in unemployment rate than larger changes in the jfr
* see table 8.2 by yourself
* logic : job loss rate applies to many more people
* employed workersk
* average labor productivity (alp) and real wage
* alp is output per unit of labor input
* if we only consider the non-farm business sector
* call it NFB
* $alp=\frac{\text{total real output in NFB}}{\text{total hours worked to produce that output in NFB}}$
* $\text{alp in booms} > \text{alp in recession}$
* alp is procyclical
* $\text{real wage} = \frac{\text{real compensation}}{\text{labor input}}$
* real wage is wildly procyclical(most studies)
* see fig 8.11
* money growth rate and inflation
* nominal money growth fluctuates alot
* money growth fall sharply at or just before a ression
* Friedman an Schwartz (1963)
* money growth is procyclical and leads the cycle.
* see fig 8.12
* finacial variables
* stock pr: procyclical, leadind
* nominal interest rate : procyclical and lagging
* see fig 8.13 for 3 month treasury bill rate
* other nominal rate : prime rate and federal fund rate
* real interest rate : no obvious cyclical patten b/c different cause of bussiness cycles
* leads to differnts effect *
* international aspects of business cycle
* key economics variables in other countries behave similarly
* timing of recesson expassion is similar
* see fig 8.14
* small fluctuation individual countries
* coincident indexes
* Chicago Fed National Activity Index(CFNAI)
* based on85 bacro variables
* coincident index : turing sinificant negative in recession
* see fig 8.15
* ADS business condition index
* economic variables with different frequency. Some monthly and Some quarterly
* see fig 8.16
* ADS index update frequency(even weekly)
* ADS and CFNAI perform similarly
* leading indicator
* The conference board has leading indicator of economy
* adecline for 2~3 months in row :arrow_right:recession danger
* problems with leading indicators
* revision of in time data->misleading signals
* false warning
* poor performance in timing recession and its serverity
* structural changes of economy
* periodic revision of the index is necessary
* Sometimes the index gives no warning of ression
* why ?
* recessionmay be caused by sudden shocks
* Seansonalty
## AD-AS model to understand the effect of various shocks
* Two component of business cycle theory
* shocks
* a model of how economy responds to shocks
* Two major business cycle theories
* 古典
* 凱因斯
* We study both theories in the AD-AS framework
* brief introduction
* full model with IS-LM
* AD-AS modelhas 3 main components in (P,Y) space
* P stands for genareal price level
* Y stands for aggoutput
* AD cure
* short run AS curve (SRAS)
* long run AS curve (LRAS)
* AD curve
* shows "quantity of goods and services demanded"(Y)for any "given price"(P)
* higher P -> lower Y
* lower P -> higher Y
* 

* similar to the law of demand in microeconomic
* logic behind in CH9
## 延伸閱讀
* [台灣CPI是否失真？](https://www.thenewslens.com/article/177318)