The development of the national economy is not uniform. It is subject to macroeconomic instability, which depends on the specific socio-economic situation in the country and in the world community. Macroeconomic instability manifests itself in a reduction in production volume and a decrease in its efficiency, in price jumps, in a decrease in labor income and savings, and in a slowdown in scientific and technological progress.

It was noted that this state of the economy manifests itself periodically, that is, in its development the economy seems to “pulsate”: periods of growth are followed by recessions, then the rise begins again. Such repeated macroeconomic changes, expressed in the movement from one state of the economy to another over a certain period of time, are called cyclicality . Graphically, macroeconomic dynamics can be represented by a wave-like line, where each wave corresponds to a full cycle of economic development.

The economic (business) cycle is the period of time between two identical states of the economy. The following are distinguished: phases of the cycle: recession (crisis), depression, recovery and recovery (Fig. 10.1.1.).

Recession (crisis) characterized by sharp reduction in business activity and deterioration of all parameters of economic development. The result is a surplus of goods relative to consumer demand, leading to lower prices. Since manufactured products are not sold, commodity producers curtail production, the number of unemployed increases sharply, household incomes decrease, and this leads to a further reduction in demand. As a result of this circumstance, many entrepreneurs find themselves insolvent and mass bankruptcies occur.

Rice. 10.1.1. Phases of the economic cycle.

The crisis is intensifying disorder of the financial sector of the economy : enterprises are experiencing an acute shortage of money to make payments and repay loan obligations to banks, and their accounts payable are increasing. As a result, bank loan interest rates increase. The crisis phase occupies a special place in the economic cycle. A crisis situation always indicates the end of a period of successful economic development and the onset of a new period, characterized by the aggravation of all economic contradictions and the destabilization of the entire national economy or its individual spheres and industries. It is believed that crises separate one cycle of economic development from another.

The following are distinguished: types of crises . Structural crisis covers, as a rule, several economic cycles and is caused by the need to rebuild the structure of production on a new technical and technological basis. Cyclical crisis represents periodically recurring declines in national production, affecting all sectors and areas of the national economy. Partial crisis affects a separate sphere or branch of the economy and can occur against the background of one of the structural components of the economic cycle (during the recession or recovery phase).

Industry crisis concerns a specific sector of the national economy. Interim crisis has a local character and occurs when the sustainable growth of national production due to economic miscalculations or the influence of external circumstances suddenly temporarily slows down, and the pace of development noticeably decreases. World crisis manifests itself as an economic crisis affecting the development of most of the largest countries in the world, acting as a crisis of the world economy.

The crisis follows depression , which is characterized by the fact that after a certain time, inventories are absorbed at reduced prices, and their further decline is suspended. This circumstance leads to the cessation of numerous bankruptcies, the level of production no longer decreases. For some time the economy is in a state of stagnation. To get out of it, enterprises are trying to reduce prices, for which they are looking for opportunities to reduce production costs. In this case, the renewal of fixed capital is of particular importance. As a result, the demand for high-performance and economical production equipment increases, which is an incentive for the industries that produce such production equipment, and then for the revitalization of the entire national economy.

Revival- the third phase of the business cycle. At that time the level of production and employment begins to increase, monetary incomes and demand of the population grow. As a result of this, as well as due to enterprises reducing production costs and increasing profits, their demand for money increases for further renovation and expansion of production. In response, banks willingly expand lending to new investment projects, which leads to an increase in loan interest and a revival of the monetary sector. Indicators of economic development reach pre-crisis levels, after which the fourth phase of the cycle begins - recovery.

Climb characterized by further an increase in production and employment, and an increase in the investment activity of enterprises. Incomes of the population increase, as a result of which consumer spending increases. At the same time, prices and production profitability increase, and unemployment is reduced to a minimum. This state of the economy continues until it reaches its highest development indicators, that is, until peak , Where production volume usually significantly exceeds the level characteristic of the beginning of the cycle . Then the phases of the cycle are repeated again and again.

Currently there are three types of economic cycles depending on the causes of occurrence and duration:

1. Short-term cycles lasting 3-4 years, called Kitchin cycles . Their reasons are associated with fluctuations in world gold reserves, as well as patterns of money circulation.

2. Medium-term cycles lasting 10-20 years. The reasons for these cycles are wear and tear and the frequency of renewal of fixed capital, disruption of the mechanism of functioning of the credit sector (Juglar cycles), as well as periodic renewal of production facilities and housing (the so-called Kuznets construction cycles).

3. Long-term cycles (large economic Kondratiev cycles ) lasting 48-55 years. Their reasons are the cyclical development of scientific and technological progress and the dynamics of the use of innovations.

Despite the fact that various types of economic cycles are characterized by certain specifics, they also have common features, manifested in the following:

Short-term, medium-term and long-term cycles of economic development do not oppose one another, but interact and complement each other;

The main mechanism of short-, medium- and long-term fluctuations is scientific and technological progress;

Short-term, medium-term and long-term cycles have a relatively synchronous form of movement and form a world cycle;

Short cycles are part of medium cycles, and the latter are part of long cycles of economic development.

Business cycles serve two main functions. The first, destructive, associated with the breaking, destructive elimination of existing abnormal proportions of production, and second, health, - with the renewal of fixed capital and, as a result, reaching new, higher levels of production.

As for modern economic cycles, then they are characterized peculiarities, which boil down to the following:

Thanks to the regulatory activities of the state, economic cycles have become shallower and shorter: their duration has decreased from 10-12 years at the end of the 19th century. - first half of the 20th century up to 5-7 years currently;

Previously, the phases of the cycle in different countries occurred at different times. Now the cycle has synchronized, and its phases occur almost simultaneously in most countries;

Thanks to anti-cyclical government regulation, the boundaries between individual phases of the cycle have become more blurred, less clear, and the phases of the cycle smoothly transition into one another;

Since the beginning of the 70s of the XX century. inherent in the economic cycle stagflation (simultaneous increase in inflation and unemployment) against the background stagnation (stagnation in production).

Economic cycle– periodic fluctuations in economic activity, alternation of recessions and booms in the economy; the period of time from one crisis to another, including four phases - crisis, depression, recovery and recovery (Figure 1).

Picture 1 - Business cycle phases

Recession- sharp changes in the basic parameters of the economy; significant in volume and long in duration; reduction in production and mass unemployment.

The following negative changes are taking place in the economy: incomes, demand, and investments are declining; interest rates and prices are falling; There is a decline in production levels and rising unemployment. In the recession phase: factors of production are redistributed from previous areas of application to new ones; uncompetitive enterprises go bankrupt; production costs are reduced.

Depression(depressive bottom) - a particularly deep and prolonged recession, accompanied by significant destructive consequences for the economy (panic, collapse of the credit system, mass bankruptcies). Bottom of the cycle - real production volume reaches its minimum.

Revival- real production volume increases relative to the bottom of the cycle and reaches its pre-crisis level. Inventories are renewed, the process of updating fixed capital begins, depreciation charges are spent on more productive and technically advanced equipment.

Climb(boom) - the economy exceeds the maximum level of production in the previous cycle and strives to achieve the volumes of real gross domestic product and full employment that are potentially possible at this stage.

Cyclicity can be considered as one of the ways self-regulation of market economy, including changes in its industry structure. A characteristic feature of cyclicity is movement not in a circle, but in a spiral, so we can say that it is a form of progressive development.

What are the reasons that, having reached the highest point of the cycle - the peak (or boom), the economy again moves to the crisis phase?

When the economy reaches the highest point of the cycle, it is operating at its maximum capacity: all economic resources are used as efficiently as possible, the population is at full employment, investment and consumer spending are very high. Under these conditions, the economy produces the maximum volume of GNP, and the demand for goods and services is fully satisfied.

However, due to inertia, enterprises continue to supply the market with new batches of goods, for the production of which they have to buy resources at higher prices, which causes an increase in the general price level. The supply of goods outstrips the demand, and serious difficulties arise with the sale of goods. A crisis of overproduction is coming. Enterprises suffer losses and production cuts begin.

All economic theorists agree that crises of overproduction are caused by a deep violation of the necessary relationship between consumer demand and supply of goods and services.

Economic crises of overproduction have two sides: destructive and healing.

Destructive side crisis is associated with the disruption and decisive elimination of the existing normal proportions in the national economy. There are many cases in history when large surpluses of production were barbarously destroyed.

Wellness side crisis is manifested in the fact that during a depression, falling prices make production unprofitable: it does not give the usual average profit. The way out of this impasse is the renewal of fixed capital (machinery, equipment). This makes it possible to reduce the cost of production, make it quite profitable and reach new production levels.

Consequently, under classical capitalism a spontaneous mechanism of cyclical development of the macroeconomy operated. It could not only enter a phase of decline in production, but also return to economic growth without government intervention.

However, such spontaneous self-regulation ended in the 20s of the twentieth century. The mechanism of spontaneous self-regulation did not work for the first time during the global economic crisis, called the “Great Depression” (1929–1933). Since then, qualitatively new features of the cyclical development of the economy have emerged, which are associated with the action of two factors of a macroeconomic scale.

First factor– scientific and technological revolution. On the one hand, it contributed to the creation of new knowledge-intensive industries that are most resistant to crisis phenomena (microelectronics, robotics, etc.). On the other hand, scientific and technological revolution has given rise to structural crises in traditional industries, where simple technology predominates. In addition, scientific and technological revolution contributed to a significant acceleration of the turnover of fixed capital and its rapid replacement with more advanced technology. As a result, crises began to occur more often: not after 10–12 years, but after 5–6.

Second factor– active government intervention in the course of macroeconomic growth in order to reduce the destructive impact of crises and achieve greater stabilization of economic development.

The first attempt to alleviate the contradictions caused by the Great Depression was made by US President Franklin Roosevelt as part of his “New Deal”. At the lowest point of the recession in 1933, America's unemployment rate was 25%, meaning one in four working-age citizens was unemployed. American incomes fell by 30%, and the decline in industrial production reached a record high.

Under these conditions, it became obvious that without outside intervention the market system would not be able to overcome this crisis. Based on the recommendations of J.M. Keynes on government regulation of the economy, Roosevelt was able to lead the US economy out of the most destructive crisis in world history. Subsequently, the West accumulated significant experience in implementing anti-cyclical and anti-crisis policies.

Since 1933, governments of countries with market economies have pursued economic policies aimed at regulating the rate of economic growth, reducing inflation and combating unemployment.

Economic cycles are characterized by broad and rapid development of the economy, an increase in the standard of living of the population in one period and a collapse in the subsequent period of the country's economic activity. Such fluctuations in economic activity are called phases of the business cycle.

Fluctuations can be compared to the ebb and flow of the tide. The upward and downward swings in the country's economic performance demonstrate differences in economic activity in terms of production, investment, employment, rates of corporate and private sector lending, and wages. Changes in these indicators form different phases of the economic cycle.

Each country at a certain stage of its development theoretically has a stable, sustainable level of growth. For example, GDPEmerging economies typically grow at a faster rate than advanced economies. On the other hand, the line in the figure passes through all phases of the economic cycle and indicates the growth rate of the country's GDP. The different phases of the business cycle are described below (as shown in the figure).

1. Rise

The cycle line, which is above the sustainable growth line, represents the upswing phase of the economic cycle. During the boom phase, there is an increase in various economic factors such as production, employment, wages, profits, supply and demand of products and sales.

In addition, during the expansion phase, prices of production factors and production itself increase almost simultaneously. At this stage, debtors are usually in good financial condition to repay their debts, therefore, lenders provide loans at higher interest rates. This leads to an increase in the money supply and the velocity of money.

In the recovery phase, due to an increase in investment opportunities, available funds of organizations or individuals are used to finance various projects. Expansion and development continues until economic conditions become less favorable.

Characteristics:

Opening new businesses and investing in the stock market

An increase in wages allows the population to earn more and, accordingly, spend more

Many new jobs are created and unemployment is reduced

Increases consumer and producer confidence

2. Peak

The rate of economic development during the expansion phase eventually slows down and reaches its peak. In other words, the peak phase refers to the stage of the economic cycle when the growth rate of GDP and other indicators reaches its maximum limit. During the peak phase, economic factors such as production, profits, sales and employment show high values ​​but no longer increase.

Then there is a gradual decrease in demand for various products due to an increase in prices for raw materials, which leads to an increase in prices for final products. Wherein, the income of individuals remains constant. At the same time, consumers are restructuring their monthly budgets. As a result, demand for products such as jewelry, houses, cars, refrigerators and other durable goods begins to fall.

3. Recession

As discussed earlier, during the peak phase there is a gradual decline in demand for various products due to the increase in prices of input materials. When the decline in demand for products accelerates and becomes the norm, the economy enters the next phase - recession.

During a recession, all economic indicators such as production, savings and investment begin to decline. As a rule, manufacturers do not immediately detect a decrease in demand for products and continue to produce goods. In this case, the supply of products exceeds the demand.

Over time, producers see excess supply, where the cost of manufacturing a product exceeds revenue. First of all, profitability is reduced in industrial enterprises, and then slowly spreads to other industries.

Initially, Economists view this situation as a small adjustment in the market, but as the problem lingers longer, producers are beginning to react more actively. They avoid any additional investment in factors of production such as labor and equipment. This leads to lower wages and equipment prices, unemployment is rising,the cost of raw materials and sales prices fall.

Characteristics:

Increasing level of bankrupt enterprises

Rising unemployment and falling wages

Inflation slows due to low demand for products

Declining consumer confidence

Rising government deficit, Delays on private and corporate loans are increasing

4. Bottom

When a region's economy is on the verge of collapse, the country's economic activity becomes negative. There is a rapid decline in national income and expenditure. At this stage, debtors find it difficult to pay off their debts. As a result, the Central Bank reduces the interest rate to stimulate demand and investments. Low rate against the backdrop of rising loan arrearsunprofitable for bankstherefore, they do not prefer to issue debt funds. Consequently, banks are faced with a situation of increasing cash balances, which they transfer for storage to the Central Bank (for example, instead of lending to the population, US banks during 2009-2017.kept funds on the balance sheet of the Federal Reserve System).

In addition, the production of goods becomes very low and the unemployment rate reaches high levels. In the USA during the depression of 1929-1933. official unemployment rate exceeded 20%. In addition, by this time investors had already lost more than 40% savings in the stock market. At this stage, many weak organizations leave the industry or are absorbed by more established competitors at bargain prices. The economy is contracting at a rapid rate.

5. Recovery

At the bottom stage, the region's GDP is rapidly declining. At some point the rate of decline slows down, probably due to positive statements and stimulating policies of the regulator.

The economic cycle is entering a recovery phase. As a result, individuals and organizations begin to have a positive attitude towards various economic factors such as investment, employment and production. U-turn, usually, starts with the labor market and wage increases.

Consequently, organizations stop laying off workers and start hiring staff, but in limited quantities. At this stage, the wages paid to employees are significantly lower compared to their skills and abilities, which marks the beginning of the recovery phase.

During the recovery phase, consumers increase consumption because they believe that (or stagflation) will soon end. As a result, the demand for consumer goods increases. In addition, bankers are again starting to provide financing and invest in various securities and bonds. Likewise, other private investors also invest in the stock market. As a result, security prices increase and interest rates decrease.

The price mechanism plays a very important role in the economic recovery phase. At the bottom stage, the rate of decline in prices for production factors is lower than the rate of decline in sales prices. Therefore, manufacturers can earn a certain profit.Profit growth also continues during the recovery phase. In addition, during the recovery phase, organizations seek to update depreciated equipment and replace old. As a result, investment and employment increase. As this process picks up speed, the economy again enters an expansion phase. Thus, the economic cycle ends.

Characteristics:

Unemployment rate begins to decline, employment rate is growing

Increase in the number of new jobs

Household spending increases

Profitability and revenue of companies are growing

How long does the economic cycle last?

The length of economic cycles has varied over time. The most relevant period for consideration is from 1945 to 2009. During this period, the average duration of GDP growth was approximately 58 months, and the average contraction was 11 months. The longest expansion period in US history ran from March 1991 to March 2001, a period of rapid economic growth and significant stock market gains.

The economies of all countries in the world are developing unevenly. It undergoes constant changes, alternating economic cycles and crises. If you depict them, you will notice that the processes occurring at the macroeconomic level can be displayed in the form of wave-like segments. Let's look at what it is and its phases.

A business cycle is the period between two high or low points on a graph. There are the following phases of the economic cycle: crisis, depression, recovery and recovery.

1. The crisis is characterized by the following economic situation. Significantly more company bankruptcies are occurring. They cannot sell the goods accumulated in warehouses, so their solvency drops sharply. There is no way to pay bills with suppliers, employees, tax authorities, etc. As a result, the bankruptcy of each enterprise has an impact on the entire environment. Suppliers do not receive payment for shipped materials, which increases their costs and can also lead to bankruptcy. Workers do not receive their wages, which significantly reduces their quality of life. They cannot purchase new products, and retail businesses suffer. In the event of bankruptcy, all employees of the enterprise are laid off, resulting in an increase in unemployment. Other negative manifestations in the country’s economy: massive non-payments on loans and mortgages, a significant drop in securities prices, the liquidation of many credit institutions. Thus, during a crisis, absolutely everyone suffers; the negative affects any area of ​​activity.
2. Depression is the phase that follows a crisis. At this point, the decline in production stops. Prices for goods reach their minimum. Consumers are gradually buying up stocks stored in the company's warehouses. Thus, money capital appears again. During a depression, there is a minimum in such indicators as the bank interest rate, level, etc. Unemployment reaches its maximum. A striking example of this cycle could be the depression of the 30s of the 20th century, when in America millions of people were left unemployed, tens of thousands of enterprises went bankrupt, including very large ones. People took any job to feed their families and pay their mortgages, since they could find themselves on the street at any moment.
3. Revival - this is where the negative phases of the economic cycle end. Now production is starting to pick up speed again. Warehouses are filled with goods. This is necessary to ensure uninterrupted supply of products to the market. Since production has picked up, new jobs appear, which means the quality of life decreases significantly, and prices begin to rise again. There is an increase in different price categories. People are increasingly beginning to give preference to luxury products. New enterprises are emerging, investors are eagerly investing their funds in gold, securities, etc. The country's economy is truly flourishing.
4. Climb. These are all positive phases of the economic cycle. Enterprises produce products in the same volumes as in the pre-crisis period. Unemployment reaches its minimum level. The quality of life of the majority of the population is high, which allows trading enterprises to make a large markup on their goods. And at the same time, there is no drop in demand for their products.

We looked at the four main phases of the business cycle. They are constantly repeated in the economy of every developing or developed country.

Economic cycle and its phases. Characteristics of phases.

Economic cycle - it is a movement from one crisis to another. In the classical cycle, there are four phases that successively replace each other: crisis, depression, recovery and recovery. In each phase there are different dynamics of production volume, price level, employment of workers, profit margins, etc.

1. An economic crisis is a fall in production, the destruction of the productive forces of society and the simultaneous adaptation of the scale of production to the scale of effective demand. Due to the limited purchasing power of the population, a situation arises when there are more goods produced than can be sold. First of all, excess goods are formed in the 2nd division. Prices are falling. The inability to sell goods and return the advanced capital leads to the fact that a lot of enterprises close. Most debt obligations are not repaid, and many enterprises declare themselves bankrupt. Entrepreneurs have an urgent need for money. But there are none. Loan interest increases. Operating enterprises sharply reduce production volumes. Unemployment is rising. Wages are being cut. Prices continue to decline. To stop their decline, goods are physically destroyed. Production volumes are reduced to the level of effective demand. In addition, crises are characterized by disruption of credit ties, falling stock prices, panic on the stock exchanges and a wave of bankruptcies.

2. Depression is a phase that is characterized by:

stagnation in production

sluggish trade

availability of free cash capital.

It is at this stage of the crisis that the prerequisites for growth are formed and inventories are dissolved. Entrepreneurs strive to restore profitability by increasing labor productivity and capital productivity. During this period, fixed capital is renewed.

After the crisis comes depression. During a depression, the economy adapts to new conditions imposed by the crisis. This phase is characterized by a pause in the decline in production and its fluctuations at a low level. The reduction in production volume during the crisis phase, the destruction of part of the inventory, as well as the fall in prices contribute to the gradual dissolution of accumulated inventory. The growth of exports of goods and capital abroad operates in the same direction. The need to adapt to low prices encourages entrepreneurs to reduce production costs. This is achieved through technical improvements, through the renewal of fixed capital. The renewal of fixed capital generates demand for equipment and creates incentives to expand production. This creates the prerequisites for the transition to a new phase of the cycle - the revitalization phase.

3. Depression is usually replaced by recovery - a phase when enterprises, having recovered from the crisis, bring production volume to the previous level. At this stage, price and profitability increases accelerate.

The recovery phase is characterized by the fact that enterprises recover from shocks and begin to expand production. At this phase, prices rise, entrepreneurs’ profits increase, and additional workers are involved in production. Achieving a production volume equal to the pre-crisis level means a transition to the next phase of the cycle - recovery.

4. Rising phase - the phase of the cycle when production exceeds the highest point reached in the previous cycle.

During the boom phase, production volumes increase steadily. Unemployment is reduced to a minimum. The effective demand of the population is increasing mainly due to rising wages due to increased employment. Investment costs are increasing. The country is experiencing a boom.

Economic crises have two sides. One of them is destructive - it is associated with breaking, with the elimination of abnormal proportions in the national economy. The other side is health. The need for periodic renewal of fixed capital is the material basis of the economic cycle. However, this factor should not be overestimated. The renewal of fixed capital is fraught with new dangers for society, because in parallel with this process there is a process of accumulation of negative indicators of the state of the economy, which will undoubtedly again lead the country to crisis.

The cycles are not alike; each of them has its own characteristics in duration and intensity. This is why some economists talk about economic fluctuations rather than cycles. Cycles, in contrast to fluctuations, imply the regularity of disruption and restoration of equilibrium in the economy. There is no single reason for cyclical development. The nature of the cycle, its duration, and the specificity of its manifestation are largely determined by the ratio of internal (endogenous) and external (exogenous) factors influencing it. External factors include all circumstances that lie outside the economic system: wars, social revolutions, major natural disasters, external expansion, the development of new markets. Each economic system has its own internal mechanism that generates cyclicality. Among the internal factors that generate the economic cycle, economists highlight: turnover of fixed capital, investment, scientific and technological progress and the use of its achievements, market dynamics, and state economic policy.