Growth and Business Cycles

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In discussing the future of business cycles in the United States, I am personally rather an optimist. This is primly due to the fact that I believe in today's world people for the most part are sort of helpless spenders. More money is being made by more people in various different fashions, and that figure does not seem to be slowing down in any way.


With inventory control, we are speaking about the promising factor that inventories do propagate and amplify other fluctuations. On the other hand, on the discussion of growth of services, we are instead speaking in regards to the significant fact that the decline of manufacturing and the rise of services should be helping to reduce volatility, this being mainly because the demand for services is usually more stable than demand for manufacturers.
The factor of better governments is highly relevant to this positive point of view as well, in that most central banks have learned to manage the economy so well that "it is sometimes argued, that they have more or less abolished the cycle." (The Economist, London, Oct 23, 1999, Anonymous).
Globalization is another crucial factor, and at least at first sense seems to make perfect sense and fit properly into the optimist's point of view. This is because increasing integration with the global economy reduces the dependence of the American economy on certain domestic demand, and "it also opens new channels of supply, reducing inflationary pressures on costs and wages." (The Economist, London, Oct 23, 1999, Anonymous).
However, even with an optimistic p ...
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