Cyclical development of the economy: the main causes and consequences

The cyclical nature of the development of the economy is its objective characteristic, which is recognized by all modern economists. They believe that the market system simply can not exist without experiencing ups and downs at certain points in time. Cyclical development of the economy is something that everyone has to reckon with, because it has a direct or indirect effect on all subjects: both individual households and the state as a whole. But what is the reason for the appearance of unexpected recessions and how to fight off?

The cyclical development of a market economy is something that representatives of the Soviet school often spoke of, advocating an administrative-command way of managing the entire system. They stated that only centralized regulation can mitigate the effects of recessions and crises. Perhaps this is really so. But whether the team economy is experiencing a real recovery is a big question.

Most modern scholars agree that the cyclical development of the economy and the change in phases of business activity is an objective reality that can not be changed by a person. As you can not learn anything without making mistakes, the economy can not move to a new stage of development without experiencing a crisis. The cyclical development of the economy reflects the situation in which the system is out of balance in order to be restored when it is restored. The crisis is the lower extremum of this growth cycle. There are several types:

1) K. Juglara (7-11 years) - associated with fluctuations in investment in fixed assets;

2) J. Kitchin (2-4 years) - the cause of which lies in the changes in the world's gold reserves;

3) N. Kondratieff (50-60 years) - associated with scientific and technological progress and its achievements.

In addition to the crisis, there are three other phases that characterize the cyclical development of the economy: depression, recovery and recovery. They differ in such voluminous indicators as GDP (gross domestic product), GNP (gross national product) and ND (national income). The whole cycle breaks up into the following elements:

1) the peak (the point at which the output was the maximum);

2) reduction (the period in which there is a gradual decline in output);

3) the bottom (the point that indicates the time at which the release is minimal);

4) recovery (the period in which the production of products is gradually being established).

Cyclical development of the economy can also be imagined by considering the alternation of the ascending and descending waves, which has a huge impact on the whole economy and the country as a whole, and on individual economic entities. But it turns out that crises are possible even in a period that is characterized by a general revival or recovery in the economy. These are the so-called intermediate crises, which are often local in nature. They cover not all the economy as a whole, but individual industries or areas of economic activity. More severe consequences characterize the structural and transformational crises, which are much longer and affect the functioning of each individual entity.