Meaning of BUSINESS CYCLE (CONT.) in English

BUSINESS CYCLE (CONT.)

Other non-Keynesian theorists of the business cycle have focussed on other (often psychological) factors besides the growth or decline of their current sales that influence businessmen's optimism or pessimism about future economic conditions (and hence their investment plans ). Still other theorists emphasize the role of occasional "supply shocks" -- sudden and unexpected changes in the supply of key resources resulting from weather cycles, natural disasters, international conflicts, big regulatory or tax changes by government, etc. (For example, the formation of the OPEC oil producers' cartel and their two massive waves of concerted production cuts/price increases in the 1970s.) Joseph Schumpeter's theory of "creative destruction" stresses the role of waves of massive innovation (major technological breakthroughs, introduction of major new products that create whole new industries) in precipitating major adjustments and reallocation of resources as old industries die and are replaced by new ones. "Monetarist" theories of the business cycle analyze the impact of shifts in decisions of the government monetary authorities (such as the Board of Governors of the U.S. Federal Reserve Banking System ) to expand or contract the money supply in their efforts to manipulate short-term interest rates and foreign exchange rates (often for selfish political reasons ). "Supply-side" theorists of the business cycle tend to emphasize the impact of periodic changes in government tax policies (especially changes in the marginal rates of taxation on various forms of investment expenditures and business income) as the major precipitant of booms and busts.

[See also: depression , inflation , political business cycle ]

English glossary of political economy terms.      Английский глоссарий политико-экономических терминов.