Economics

Perhaps the most widely quoted and influential definition is that of Burns and Mitchell (1946, p.l) who state that:

Business cycles are a type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprises:

Managing Complexity

The U.S. economy consists of millions of buyers and sellers of goods and services. Think about all the economic activity near where you live. Even in a small town there are dozens of businesses, hundreds of workers, and thousands of items that could be purchased on any given day. You could not possibly keep track of all the decisions that affect the economy of a small town.

The possibility that the financial system might be a source of instability leading to crises was frequently discussed in pre-Keynesian business cycle literature, which is reviewed briefly in the next section. The main focus of the chapter is the revival of interest in the financial instability hypothesis (FIH) in the 1970s and 1980s.

 Brief Overview of Cycle Modelling

Like Marx, Keynes failed to formalise a complete theory of dynamic economic development or of its components, growth and business cycles. It is a testament to the magnitude of the problem that these two great economic and social thinkers were unable to formulate such a theory.

• ECONOMIST(1723–1790)
• Founder of Classical Economics
• Professor of Moral Philosophy, University of Glasgow,
• Author of The Theory of Moral Sentiments (1759),
• Author of An Inquiry Into the Nature and Causes of the Wealth of Nations (1776)