The economy is in recession. What happens in the economy after the recession? Economic recession: concept, causes and consequences

Recession translated from Latin Recessus means retreat. The phase of the economic cycle that occurs during the recovery and is the predecessor of the depression and crisis in the economy is called a recession. The recession, as a phenomenon, slows down the rate of state economic growth, its manifestations and is observed in a moderate decline in production or negative and zero dynamics of GDP growth.

The concept of a recession in the economy and macroeconomics is interpreted as a moderate decline in production, which is not critical for reducing the rate of economic growth. With a drop in production growth for half a year size of GDP stands at zero or falls to a negative value.

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It is almost impossible to predict a recession, but with the right government measures it can be reduced. The development of a recession could be a source of serious economic crisis.

The business cycle represents regular changes in the level of production, including employment and profits. Duration of one business cycle ranges from 2 to 10 years. The economic cycle is a single process that successively passes through the periods of functioning of the economy, they differ in the direction and level of activity.

There are such phases of the economic cycle:

Crisis, aka recession

Subsequently, economic equilibrium is disturbed. A crisis arises after a recession - production growth is accompanied by a recession. A crisis condition occurs subsequently, a decrease or decrease in the volume of manufactured products, in particular difficult situations reduction of work entails the destruction of the productive forces.

In a market economy, a production crisis most often occurs, it negatively affects the sale of goods, a fall in prices and production volume. A decrease in the volume of production subsequently, the remainder of unrealized inventories, a decrease in production, a drop in demand for labor, a decrease in profits, a decrease in creditworthiness and a slowdown in the growth of prices for manufactured goods and services are factors of the recession.

The production crisis due to the insolvency of the enterprise leads to bankruptcy.

Depression

Follows the crisis. During a depression, there is a gradual sale of surplus products, sales of products are resumed and production volumes increase. The economy is in a stagnant state, the decline in GDP stops.

The resulting free capital is integrated into banks, which expands the possibilities of providing loans. Gradual economic growth during the depression phase precedes economic recovery. At this stage, organizations are faced with the main task - to increase profits, during the crisis there was a reduction in costs.

Revitalization

It is the latest level of economic downturn. During the recovery phase, there is a gradual expansion of reproduction and a return to the pre-crisis level.

The rise or expansion is accompanied by the active development of the economy. Expansion implies an excess of production volumes that were before the crisis. The rise is accompanied by an increase in the price level, a decrease in unemployment, an increase in loan capital and attraction of investments.

The main phase of the economic cycle is the crisis (recession). The crisis accompanies the end of one development period and precedes the emergence of a new cycle, thus, there is a cyclicality. During a crisis, the entire rooted scheme of reproduction is destroyed and a new, more developed system is created. The mechanism of falling prices during a recession leads to a fall in the value of shares, interest rates, a decrease in profits, as well as bankruptcy.

The crisis excludes the overaccumulation of capital by means of depreciation of funds, which stimulates the renewal of production and the improvement of technologies.

Causes and types

An economic crisis can subsequently arise for many reasons, some of which are the following factors:

1. A recession can arise from unplanned global changes in market conditions. Events influencing changes in the world economy can be wars, natural disasters and sharp fluctuations in the value of natural resources (gold, oil, coal, etc.).
2. A sharp drop in sectoral industrial production leads to a recession.
3. A recession can arise from a decline in the purchasing power of the population. A decrease in the level of income leads to a decrease in sales volumes resulting in a decrease in production volumes.
4. The recession can be caused by the collapse of the national economy. Most of the state capital is investment by private entrepreneurs. Accordingly, a decrease in the level of investment leads to a state crisis.

There are three types of recession depending on the causes of occurrence:

1. Under the influence of changes in market conditions - with very sharp changes in the world economic conditions, the prerequisites for which are wars and a decline in price policy for natural resources there is a risk of a recession. Such conditions are very dangerous, since they are not typical and do not lend themselves to analysis and forecasts.
2. Political and social aspects, as the cause of the recession, are less dangerous for the economy, since they are amenable to regulation and elimination. Such reasons include decreased consumer confidence, reduced investment, and decreased business activity.
3. Loss of economic equilibrium, during which increase debentures and there is a rapid drop in quotations in the markets also leads to a crisis.

Effects

The main consequences of the recession in the economy include:

• decline in production volumes;
• the collapse of financial markets;
• decreased creditworthiness;
• increase in unemployment;
• reduction in the level of income of the population;
• falling GDP;

The most critical consequence of the recession is the economic crisis. The production downturn leads to job losses. Lack of money and unemployment leads to a decrease in demand for manufactured products. Unsold goods generate unnecessary inventory costs.

The enterprise, upon the formation of a surplus of production, reduces production volumes. Citizens have debts on loans, as a result of which the policy of lending to legal and individuals, investment in research and development is declining. Market crashes valuable papers - stocks are getting cheaper.

This is followed by inflation and a decrease in the purchasing power of the population. The state is trying to deal with the situation increases its external debt by taking loans. In general, the national level of reproduction and GDP are declining.

Economic stability is achieved only after many years of work; the main criterion for avoiding a crisis is forecasting and regulating recessions.

Historical example

History knows several examples of recessions that affected whole groups of countries around the world. Thus, in the 1990s, the global financial crisis affected the economies of the countries of the European Union, Latin America, Southeast Asia and Russia. A clear example of the financial and economic recession that has affected almost the entire world economy is the global crisis that began in 2008.

2006 saw the collapse of the US mortgage system. Over time, the crisis gripped the banking and financial system state. By the beginning of 2008, the crisis had acquired a worldwide character. The impact of the crisis was reflected in a decrease in the scale of production, a decrease in the level of GDP, and an increase in unemployment. Several countries, including Russia, have reduced lending to a minimum. In Russia, the global crisis has led to the bankruptcy of many banking organizations, large firms and a decline in the living standards of the population.

The global financial crisis has affected the economies of developed and developing countries. World practice has shown that the most important task of any state is to ensure financial stability and avoiding recession.

Fluctuations economic activity (economic conditions), consisting in repeated contraction (economic recession, recession, depression) and expansion of the economy (economic recovery). The cycles are periodic, but usually irregular. Usually (within neoclassical synthesis) are interpreted as fluctuations around the long-term trend of economic development.

A deterministic point of view on the causes of economic cycles is based on predictable, well-defined factors that form at the stage of recovery (factors of decline) and recession (factors of recovery). The stochastic point of view assumes that cycles are generated by factors of a random nature and represent a reaction economic system to internal and external impulses.

Usually allocate four main types economic cycles:

short-term Kitchin cycles (typical period is 2-3 years);
medium-term Juglar cycles (typical period is 6-13 years);
kuznets rhythms (characteristic period - 15-20 years);
long waves of Kondratyev (the characteristic period is 50-60 years).

Phases

There are four relatively distinct phases in business cycles: peak, decline, bottom (or “trough”), and rally; but these phases are most characteristic of the Juglar cycles.

Business cycles in economics

Climb

The rise (revival) occurs after reaching the lowest point of the cycle (bottom). It is characterized by gradual growth in employment and production. Many economists believe that this stage is characterized by low inflation rates. Innovation is being introduced into the economy with a short payback period. Demand pent-up during the previous downturn is being realized.

Peak

The peak, or top of the business cycle, is the “high point” of economic recovery. In this phase, unemployment usually reaches the lowest level or disappears altogether, production capacities operate at maximum or close to it load, that is, almost all the material and labor resources available in the country are involved in production. Usually, though not always, inflation rises during peaks. The gradual saturation of markets increases competition, which lowers the rate of return and increases the average payback period. The need for long-term lending is increasing with a gradual decrease in the ability to repay loans.

Recession

A recession (recession) is characterized by a decline in production and a decline in business and investment activity. As a result, the growth of unemployment is increasing. Officially, the phase of economic recession, or recession, is considered to be a decline in business activity that has lasted for more than three months in a row.

Bottom

The bottom (depression) of the business cycle is the “lowest point” of production and employment. It is believed that this phase of the cycle is usually not long. However, history knows exceptions to this rule. The Great Depression of the 1930s, despite periodic fluctuations in business activity, lasted 10 years (1929-1939).

A characteristic feature of cyclical development is that it is, first of all, development, and not fluctuations around some constant (potential) value. Cyclicity means development in a spiral, and not in a vicious circle. This is the mechanism of progressive movement in its most diverse forms. The economic literature emphasizes that cyclical fluctuations occur around the trajectory of long-term growth (secular trend).

Causes

The theory of real economic cycles explains the booms and the lows by the influence of real factors. In industrialized countries, this may be the emergence of new technologies, changes in raw material prices. In agrarian countries - harvest or crop failure. Force majeure situations (war, revolution, natural disasters) can also trigger changes. Anticipating a change in the economic environment for better or worse, households and firms begin to massively save or spend more. As a result, aggregate demand decreases or increases, turnover decreases or increases. retail... Firms receive fewer or more orders for the manufacture of products, respectively, the volume of production and employment change. Business activity is changing: firms begin to reduce the range of products or, on the contrary, launch new projects, take loans for their implementation. That is, the entire economy fluctuates, trying to come to equilibrium.

Besides hesitation aggregate demand there are other factors that affect the phases of the economic cycle: changes depending on the change of seasons in agriculture, construction, automotive industry, retail seasonality, secular trends economic development countries that depend on the resource base, the size and structure of the population, and good governance.

Impact on the economy

The existence of the economy, as a collection of resources for a steadily growing consumption, has an oscillatory character. Fluctuations in the economy are expressed in the economic cycle. The “thin” moment of the economic cycle is considered to be a recession, which, at some scales, can turn into a crisis.

The concentration (monopolization) of capital leads to "wrong" decisions on the scale of the country's economy or even the world. Any investor seeks to receive income from their capital. The investor's expectation of the size of this income comes from the boom-peak stage, when the income is maximum. At the stage of recession, an investor considers it unprofitable for himself to invest in projects with a yield lower than yesterday's.

Without such investments (investments), production activity is reduced, as a result of the solvency of workers in this area, who are consumers of goods and services in other areas. Thus, a crisis in one or several industries affects the entire economy as a whole.

Another problem of capital concentration is the withdrawal of the money supply (money) from the sphere of consumption and production of consumer goods (also the sphere of production of the means of production of these goods). The money received in the form of dividends (or profit) is accumulated in the accounts of investors. There is a lack of money to maintain the required level of production, and as a consequence, a decrease in the volume of this production. The unemployment rate is growing, the population is saving on consumption, and demand is falling.

Of the economic sectors, the service sector and non-durable goods industries are somewhat less affected by the devastating effects of the economic downturn. The recession even contributes to the revitalization of some activities, in particular, increases the demand for the services of pawnshops and lawyers specializing in bankruptcy. Firms that produce capital goods and consumer durables are most sensitive to cyclical fluctuations.

These firms are not only the hardest to weather the downturn, but also benefit the most from the recovery. There are two main reasons:

• the possibility of postponing purchases;
• market monopolization.

The purchase of capital equipment can often be postponed for the future; in difficult times for the economy, manufacturers tend to refrain from purchasing new machinery and equipment and constructing new buildings. During prolonged recessions, firms often choose to repair or modernize outdated equipment rather than spending large sums on new equipment.

As a result, investment in manufacturing goods is sharply reduced during economic downturns. The same applies to consumer durables. Unlike food and clothing, buying a luxury car or expensive home appliances can be put off until better times. During periods of economic downturns, people are more likely to fix rather than change durable goods. While sales of food and apparel tend to decline as well, the decline is usually less than the decline in demand for durable goods.

Monopoly power in most capital goods and consumer durables stems from the fact that the markets for these goods are usually dominated by a few large firms. Monopoly position allows them to keep prices at the same level during economic downturns, reducing production in response to falling demand. Consequently, falling demand affects production and employment much more than prices. A different situation is typical for industries producing short-term consumer goods. These industries usually respond to falling demand with a general decline in prices, since none of the firms has significant monopoly power.

History and long cycles

Business cycles are not truly "cyclical" in the sense that the length of a period, say, from one peak to another has fluctuated significantly throughout history. Although economic cycles in the United States have lasted about five years on average, cycles are known to last from one to twelve years. The most pronounced peaks (measured as a percentage rise over the trend of economic growth) coincided with the great wars of the 20th century, and the deepest economic downturn, excluding the Great Depression, occurred after the end of World War I.

In the late 20th century, the American economy appears to have entered a period of prolonged recession, as evidenced by some economic indicators, in particular the level of real wages and the amount of net investment. However, even with a long-term downward trend in growth, the US economy continues to grow; Although in the early 1980s, the country registered a negative GDP growth, in all subsequent years, except for 1991, it remained positive.

Symptomatic of the long-term recession that began in the 1960s is the fact that, while growth rates have rarely been negative, the level of economic activity in the United States has hardly exceeded the growth trend since 1979.

It should be noted that along with the described economic cycles, the theory also distinguishes long cycles. Long cycles in the economy - economic cycles with a duration of more than 10 years. Sometimes referred to by the names of their researchers.

Investment Cycles (7-11 years old) studied by Clement Juglar. These cycles, apparently, make sense to consider as medium-term, rather than long.

Infrastructure Investment Cycles (15-25 years old) studied by Nobel laureate Simon Kuznets.

Kondratieff cycles (45-60 years old) was described by the Russian economist Nikolai Kondratyev.

It is these cycles that are most often referred to as "long waves" in the economy.

Kitchin's cycles

Kitchin's cycles - short-term economic cycles with a characteristic period of 3-4 years, discovered in the 1920s by the English economist Joseph Kitchin. Kitchin himself explained the existence of short-term cycles by fluctuations in world gold reserves, but in our time such an explanation cannot be considered satisfactory. In modern economic theory the mechanism for generating these cycles is usually associated with time delays (time lags) in the movement of information, which influence decision-making by commercial firms.

Firms react to the improvement of the market situation by fully loading their capacities, the market is flooded with goods, after a while excessive stocks of goods are formed in warehouses, after which a decision is made to reduce the capacity utilization, but with a certain delay, since information about the excess of supply over demand itself usually comes with a certain delay, in addition, it takes time to verify this information; it also takes some time to make and approve the decision itself.

In addition, there is a certain lag between the decision making and the actual decrease in the capacity utilization (it also takes time to bring the decision into practice). Finally, another time lag exists between the moment when the level of utilization of production capacities begins to decrease and the actual resorption of excess stocks of goods in warehouses. In contrast to Kitchin's cycles, within the Juglar cycles, we observe fluctuations not only in the level of utilization of existing production facilities (and, accordingly, in the volume of inventories), but also fluctuations in the volume of investments in fixed assets.

Juglar cycles

Juglar cycles - medium-term economic cycles with a characteristic period of 7-11 years. Named for the French economist Clement Juglar, who was one of the first to describe these cycles. In contrast to Kitchin's cycles, within the Zhuglar cycles, we observe fluctuations not only in the level of utilization of existing production facilities (and, accordingly, in the volume of inventories), but also fluctuations in the volume of investments in fixed assets. As a result, to the time delays characteristic of Kitchin's cycles, there are also added time delays between the investment decisions and the construction of the respective production facilities (and also between the construction and actual start-up of the respective facilities).

An additional delay also forms between the decline in demand and the elimination of the corresponding production capacity. These circumstances determine the fact that the characteristic period of the Juglar cycles turns out to be noticeably longer than the characteristic period of the Kitchin cycles. Cyclical economic crises / recessions can be considered as one of the phases of the Zhuglyar cycle (along with the phases of recovery, recovery and depression). At the same time, the depth of these crises depends on the phase of the Kondratieff wave.

Since there is no clear periodicity, an average value of 7-10 years was taken.

The phases of the Juglar cycle

In the Juglar cycle, four phases are quite often distinguished, in which some researchers distinguish subphases:

• revival phase (start and acceleration sub-phases);
• phase of recovery, or prosperity (sub-phases of growth and overheating, or boom);
• recession phase (subphases of collapse / acute crisis and recession);
• phase of depression, or stagnation (sub-phases of stabilization and shift).

The cycles (rhythms) of the Smith have a duration of approximately 15-25 years. They were named Kuznets cycles after the American economist, future Nobel laureate Simon Kuznets. They were discovered by him in 1930. Smith associated these waves with demographic processes, in particular, the influx of immigrants and building changes, so he called them "demographic" or "construction" cycles.

Currently, a number of authors consider Kuznets rhythms as technological, infrastructural cycles. As part of these cycles, there is a massive upgrade of core technologies. In addition, the large cycles of property prices on the example of Japan in 1980-2000 coincide well with the Kuznets cycle. and the duration of the big half-wave of the US price rally.

There was also a proposal to consider Kuznets rhythms as the third harmonic of the Kondratyev wave. There is no clear periodicity, so the researchers take an average value of 15-20 years.

Kondratieff cycles

Kondratyev's cycles (K-cycles or K-waves) are periodic cycles of the modern world economy lasting 40-60 years.

There is a definite connection between the long Kondratieff cycles and the medium-term Juglar cycles. Such a connection was noticed by Kondratyev himself. Currently, the opinion is expressed that the relative correctness of the alternation of the upward and downward phases of the Kondratieff waves (each phase of 20-30 years) is determined by the nature of the group of nearby medium-term cycles. During the upward phase of the Kondratieff wave, the rapid expansion of the economy inevitably leads society to the need for change. But the possibilities for changing society are lagging behind the requirements of the economy, therefore, development goes into a downward B-phase, during which crisis-depressive phenomena and difficulties force us to rebuild economic and other relations.

The theory was developed by the Russian economist Nikolai Kondratyev (1892-1938). In the 1920s. He drew attention to the fact that in the long-term dynamics of some economic indicators there is a certain cyclical regularity, during which the phases of growth of the corresponding indicators are replaced by phases of their relative decline with a characteristic period of these long-term fluctuations of about 50 years. Such fluctuations were designated by him as large or long cycles, later named by J. Schumpeter in honor of the Russian scientist Kondratieff cycles. Many researchers began to call them also long waves, or Kondratieff waves, sometimes K-waves.

The characteristic wave period is 50 years with a possible deviation of 10 years (from 40 to 60 years). Cycles consist of alternating phases of relatively high and relatively low rates of economic growth. Many economists do not recognize the existence of such waves.

N. D. Kondratyev noted four empirical patterns in the development of large cycles:

Before the start of the upward wave of each large cycle, and sometimes at the very beginning of it, significant changes are observed in the conditions of the economic life of society.
Changes are expressed in technical inventions and discoveries, in changes in the conditions of monetary circulation, in the strengthening of the role of new countries in world economic life, etc. These changes to one degree or another occur constantly, but, according to ND Kondratyev, they proceed unevenly and are most intensely expressed before the onset of upward waves of large cycles and at their beginning.

The periods of upward waves of large cycles, as a rule, are much richer in major social upheavals and upheavals in the life of society (revolutions, wars) than periods of downward waves.
In order to be convinced of this statement, it is enough to look at the chronology of armed conflicts and coups in world history.

The bearish waves of these large cycles are accompanied by a prolonged depression in agriculture.

Large cycles of the economic conjuncture are revealed in the same single process of the dynamics of economic development, in which medium cycles with their phases of boom, crisis and depression are also revealed.

Kondratyev's research and conclusions were based on empirical analysis of a large number of economic indicators different countries over fairly long periods of time, covering 100-150 years. These indicators are: price indices, government debt securities, nominal wages, indicators of foreign trade turnover, mining of coal, gold, production of lead, pig iron, etc.

Kondratyev's opponent, D.I. Oparin, pointed out that the time series of the studied economic indicators, although they give larger or smaller deviations from the average in one direction or another in different periods economic life, but the nature of these deviations, both in terms of a separate indicator and in the correlation of indicators, does not allow us to single out strict cyclicality. Other opponents pointed to ND Kondratyev's deviations from Marxism, in particular, his use of the "quantitative theory of money" to explain the cycles.

Over the past 80 years, the theory of Long Waves by Nikolai Kondratyev has been enriched with the theories of creative destruction by I. Schumpeter, the theory of technical and economic cenoses by L. Badalyan and V. Krivorotov, the theory of technological orders developed by academicians S. Glazyev and Lvov, and the theory of evolutionary cycles by Vladimir Pantin.

The theory of long waves, as well as Nikolai Kondratyev himself, was rehabilitated by the famous Soviet economist S.M. Menshikov in his work “Long waves in the economy. When Society Changes Its Skin ”(1989).

Dating of the Kondratieff waves

For the period after the industrial revolution, the following Kondratieff cycles / waves are usually distinguished:

• 1 cycle - from 1803 to 1841-43 (the moments of minimums of economic indicators of the world economy are marked)
• 2nd cycle - from 1844-51 to 1890-96
• 3rd cycle - from 1891-96 to 1945-47
• 4th cycle - from 1945-47 to 1981-83
• 5 cycle - from 1981-83 to ~ 2018 (forecast)
• Cycle 6 - from ~ 2018 to ~ 2060 (forecast)

However, there are differences in the dating of the "post-Kondratieff" cycles. Analyzing a number of sources, L. E. Grinin and A. V. Korotaev give the following boundaries of the beginning and end of the "post-Kondratieff" waves:

• 3rd cycle: 1890-1896 - 1939-1950
• 4th cycle: 1939-1950 - 1984-1991
• Cycle 5: 1984-1991 -?

The relationship between Kondratieff waves and technological paradigms

Many researchers associate the change of waves with technological structures. Breakthrough technologies open up opportunities for expanding production and form new sectors of the economy that form a new technological order. In addition, the Kondratieff waves are one of the most important forms of implementation of industrial production principles.

The summary system of Kondratieff waves and the corresponding technological orders is as follows:

• 1st cycle - textile factories, industrial use of coal.
• 2nd cycle - coal mining and ferrous metallurgy, railway construction, steam engine.
• 3rd cycle - heavy engineering, electric power, inorganic chemistry, steel and electric motor production.
• 4th cycle - production of cars and other machines, chemical industry, oil refining and internal combustion engines, mass production.
• 5th cycle - development of electronics, robotics, computing, laser and telecommunications technology.
• 6th cycle - possibly NBIC-convergence en (convergence of nano-, bio-, information and cognitive technologies).

After the 2030s (2050s according to other sources), a technological singularity may occur, which cannot be analyzed and predicted at the moment. If this hypothesis is correct, then Kondratyev's cycles may end closer to 2030.

Limitations of the Kondratiev model

The Kondratieff waves have not yet received final recognition in world science. Some scientists build calculations, models, forecasts based on K-waves (all over the world and especially in Russia), and a significant part of economists, including the most famous ones, doubt their existence or even deny them altogether.

It should be noted that, despite the importance of the cyclical development of society discovered by ND Kondratyev for forecasting tasks, its model (as well as any stochastic model) only studies the behavior of the system in a fixed (closed) environment. Such models do not always answer questions related to the nature of the system itself, the behavior of which is being studied. At the same time, it is well known that the behavior of a system is an important aspect in its study.

However, no less important, and perhaps even the most important, are aspects of the system associated with its genesis, structural (gestalt) aspects, aspects of complementarity of the logic of the system with its subject, etc. It is they that allow us to correctly pose the question of the reasons for a particular type of behavior system depending, for example, on the external environment in which it operates.

Kondratyev's cycles in this sense are just a consequence (result) of the system's reaction to the prevailing external environment. The issue of revealing the nature of the process of such a response today and revealing the factors that affect the behavior of systems is relevant. Especially when many, relying on the results of ND Kondrat'ev, AV Korotaev and SP Kapitsa on the densification of time, predict a more or less rapid transition of society to a period of permanent crisis.

When studying the fundamental factors of price movement, it is important to take into account the general state of the economic development of one or another state at the current time, since the national bank will rely on it when planning its further actions. Among the popular conditions is the recession in the economy, which is currently observed in a number of countries.

Therefore, below it will be described what this phase of the country's economic situation is and what measures against its background can be expected from the central banks, whose task is to support national currency and domestic manufacturers. Theoretical material and examples will be submitted in simple words, so as not to leave an understatement.

Explanation of the term and the specifics of its use

History shows that the economy of any country always goes through cycles of growth and recession, developing in a cyclical pattern. In this regard, four main stages are noted, namely:

• active development;
• being at the peak of development;
• attenuation;
• reaching the bottom (crisis).

A period of decay, when the economy is in trouble and the situation inside the country worsens, moving from the peak of its development to the bottom, is called a recession.

If we turn to the morphology of the word, then it comes from recessus, which is translated from Latin as digression. The main signs will be a slowdown in economic development, a decrease in production volumes, a decrease in wages, a decrease in the working day, and so on. Moreover, this process is usually quite protracted and stretches for at least a year, or even more. If the crisis is developing at an intensive pace, then the word recession is not used, then they say - recession, collapse, etc.

Periods of economic recession are inevitable, as the economy, like the ocean, also experiences its own ebb and flow. Therefore, economists are always ready in advance for a new round of recession, and the Central Bank has a number of mechanisms in its arsenal that help it to take the country out of this period, spurring development.

Concluding the introductory part, it should be noted that the most developed countries of the world are so closely intertwined that the recession of one inevitably leads to problems in the other. Therefore, in the event of a stagnation of the economy of one of the key countries, a chain reaction usually begins, which soon causes, for one reason or another, a recession in other states. One of the striking examples recent years - China. As soon as the PRC entered the recession phase, other countries immediately felt the negative of this phenomenon.

What phenomena are characteristic during this period

It is not difficult for financiers to notice the slowdown that has begun, as they can observe very characteristic phenomena during a recession in the economy, which are difficult to miss. If above it was briefly indicated by what signs you can notice attenuation, now we will describe the main signs in more detail.

1. The general macro indicator, which reflects the totality of economic factors, is the volume of the gross product, known by its abbreviation - GDP. If its indicators fall, then there is no doubt that the country's economy is in a phase of recession.
2. The second factor will be a slowdown in production volumes, as well as a decrease in consumer activity, who are beginning to save more and save more than spend. These signs are well reflected by the macroeconomic indicator - the level of business activity.
3. As soon as a business starts to experience problems, workers are laid off. As a result, the number of unemployed is growing, and the corresponding macro indicators clearly indicate this.
4. The slowdown in growth is causing another negative phenomenon - manufacturers and service providers are beginning to save by cutting wages for their employees. This leads to a decrease in profits for the population, who, again, are forced to reduce their costs, which aggravates the general situation in the state.
5. The last telltale sign will be inflation. Its change reflects well the presence or absence economic problems inside the country.

Usually all these phenomena are interconnected, since the appearance of one of them causes a chain reaction. Therefore, any of the signs described above speaks eloquently about an urgent problem.

Because of what the economy is entering a decay stage

Despite the fact that the state's economy enters the stage of recession on a regular basis, obeying cyclical development, the reasons that lead to this are usually completely different. Moreover, they can be both internal and external. Below are the most common negative factors leading to a recession in the economy, the reasons that harm the state and lead to a halt in the pace of economic development.

Scientific and technical progress

It seems strange, but the revolution in the world of scientific and technological progress is not always a joyful phenomenon. Often, progress leads to a recession, as the introduction of new solutions can make the old familiar goods or services unnecessary. Accordingly, some industries or service sectors may cease to exist, which will cause a large number of unemployed to appear, reduce revenues to the state budget, and so on.

Reducing the cost of commodities

For a number of countries whose budgets are replenished by exporting raw materials to the world market, the decline in the cost of energy resources leads to a recession. A very good example is the fall in oil prices in 2013-2015. Against the background of the cheapening of black gold, a number of states, including Canada, Russia, Mexico, etc., experienced a strong budget deficit, which led to a deterioration in the country's economic condition.

Banking segment crisis

Suffice it to recall the 2008 crisis in the United States, when American banks, which seemed unshakable and were the personification of financial stability, suddenly became the cause of a severe economic crisis in one of the most developed economies in the world. The reason was that they easily provided loans to everyone, especially for real estate, as a result of which the volume of issued credit funds upset the natural balance. At some point, loan holders lost the ability to repay them, which caused the bankruptcy of small financial structures, while large institutions were forced to insure their risks and tighten requirements. As a result, businesses began to receive extremely poor working conditions, which led to a general slowdown in production, services, trade, etc.

Force majeure circumstances

In some cases, a recession is the result of force majeure. The strong earthquake that hit Japan a few years ago is a good example. It was impossible to predict it, but the damage caused was so significant that investors who use the yen as a safe haven currency for their capital began to hastily withdraw them. The rapid financial outflow caused a sharp drop in the yen and, as a consequence, a protracted period of recession.

Impact of the recession on the country's economy

If we talk about the consequences that the recession causes, then many of them have already been described above, which tells about the recession in the economy and the phenomena that accompany it. Nevertheless, below is a list of points to keep in mind, as in many ways they provide opportunities for currency speculators to make money, which can be used to their advantage.

1. A decrease in production volumes will lead to a loss of profit by enterprises, as a result of which the value of their shares falls.
2. Decrease in consumption of goods and services. This factor leads to a depreciation of the national currency, since the Central Bank will soften the course of monetary policy in order to neutralize the negative consequences of this phenomenon.
3. An increase in the number of unemployed. Few traders do not know how strongly the monthly publication from the labor market, the NFP, affects the US dollar rate. The same applies to other countries - the unemployment rate serves as a significant benchmark for investors, so the rise in the unemployed weakens the currency, and the decrease - strengthens.
4. The fall in the number of loans issued by banks and the increase in interest rates on loans also indicate that the conditions for the development of the country's economy are deteriorating, and therefore its currency will become cheaper.
5. If some factors indicate a recession has begun, then we can expect a fall stock market state. At this point, you can play short, selling blue-chip stocks or opening short positions on the stock market index.

National bank actions in a downturn

As soon as the first signs of recession appear, the National Bank of the state begins to gradually put into action certain mechanisms that stimulate the economy and improve the conditions for business.

The most common option the Central Bank resorts to is to lower interest rates. This depresses the exchange rate of the national currency, and quite significantly, which allows traders to make good money at a distance, opening short positions.

In addition, the Central Bank can conduct foreign exchange market interventions, preventing the development of especially protracted and strong trends when the quotes of the national monetary unit begin to weaken a lot. So, for example, did the Central Bank of the Russian Federation in 2014-2015, pouring in large amounts of money to stop the fall russian ruble against the US dollar.

Knowing the specifics of the development of events during a recession, skilled speculators and investors can find many opportunities for themselves that allow them to make good money.

It is known that the functioning of the capitalist economy is subject to cyclical fluctuations.

For the first time, the cyclical nature of macroeconomic processes was identified back in the 19th century in connection with recurrent crises of overproduction in England (since 1825), which have since been regularly repeated at intervals of 7-12 years.

Since 1825 recurrent crises those. recessions (recessions) of national production and above all industrial production and employment, as well as other indicators, are repeated at approximately the same frequency, albeit with different intensity, and since 1857. this phenomenon began to manifest itself on a global scale.

Such crises are always followed by climbs national production. And since this is alternation recessionsand climbs (hesitation) wears periodic, i.e natural character, obvious cyclical macroeconomic fluctuations. It is this cycle that modern economists have in mind when they use the term "business cycle".

1. The concept of the business cycle. The main components of economic dynamics. The phases of the economic (business) cycle.

2. Classical and Keynesian interpretations of cyclical fluctuations.

3. Modern theories of macroeconomic fluctuations.

4. Problems of forecasting.

The concept of the economic (business) cycle. The main components of economic dynamics. Cycle phases.

Economic cycle representssuccessive and periodically recurring recessions and rises in economic (business) activity against the background of the general trend (trend) of economic growth.

Figure 7.1 shows a typical loop interpretation: potential GDPin conjunction with actual GDP.

The purple prima line characterizes the general trend of economic growth, i.e. long-term dynamics of potential GDP.

The wavy red line characterizes short-term dynamics of actual GDP.

As follows from the diagram presented, to identify cyclicality as a form of movement (functioning) of the capitalist market economy short-term analysis is needed, while long-term analysis, the subject of which is potential GDP, is necessary to identify patterns of economic growth and development.

In fact, the business cycle is not easy to spot. The fact is that a market economy (like any other) is characterized by a wide variety of fluctuations, for example, seasonal, of both natural and anthropogenic origin. Both irregular and random fluctuations can be detected. Therefore, scientists are faced with the need to develop methods to eliminate such fluctuations in the course of macroeconomic analysis.

Although the cyclical development of the capitalist economy was noticed long ago and is recognized by most economists, not everyone shares the opinion about the existence economic (business) cycle... Term « cycle » involves recognition natural and therefore regular and projectedthe nature of macroeconomic fluctuations, and also - this is the main thing - the recognition endogenous (internal) nature of these vibrations.

Some economists argue that macroeconomic fluctuations - fluctuations in business activity - irregularsince they are due to exogenous (external to the economy) factors and, therefore, these fluctuations not natural and not predictable.

The phases of the economic (business) cycle.

Economic (business, mid-term ) cycle consists of four phases (fig. 7.2):

climb (revitalization),

high point of the cycle – peak cycle (" boom»),

recession, or recession(can go to depression),

lowest point of cycle (depression, bottom).

Rise (revive) starts with the growth of the actual GDP and reducing unemployment that due to the growth of aggregate demand, primarily investment... Then a certain rise in the price level begins ( premature inflation). Once the economy reaches potential GDP , the next phase begins.

GDP

recession

hollow

The presented modern structure of the cycle is essentially a two-phase model of the cycle: phase recession(recession) and phase expansion (climb). Hollow and peak act as turning points between these two phases.

Has spread and four-phase(fig. 7.3) cycle model. K. Marx singled out four phases (though he meant industrial cycle):

a crisis (falling production volume, rising unemployment);

depression (the decline in production and the growth of unemployment stops);

revitalization(a slight decrease in unemployment, the beginning of an increase in production - up to so and);

climb(rapid growth in production and employment after so. and).

Dot and represents the highest level of economic activity achieved in the previous cycle. The dotted line touching the peak points of the cycles represents the long-term (secular) trend of economic growth.

For the first time, cyclicality as a statistical regularity was revealed in the 60s of the XIX century. French statistician K. Jouglar. The merit of theoretical explanation and analysis of the (industrial) cycle belongs to K. Marx. Therefore, these cycles are called Marx-Juglar cycles.

What is the characteristic of the crisis (or recession, or recession)?

In the past (in the 19th century), crises usually began with a sudden gap between excessive aggregate proposal and insufficient aggregate in demand... As a result, prices and profits fell sharply, dragging production and employment with them (rising unemployment).

K. Marx explained crises (and hence the cycle) endogenously the inherent contradiction between the capitalist economy social nature of production and private nature appropriationproduction results:

The social nature of productionmeans the general interconnection and interdependence of macroeconomic processes.

Private nature of appropriation the results of production is manifested in the fact that firms striving to maximize profits make decisions and act autonomously ( atomistically- Karl Marx's term), i.e. independently of each other.

Autonomous decisions and the actions of firms based on them lead to a violation private, general,and finally macroeconomic equilibrium .

Violations of conditions macroeconomic equilibrium wear explosive nature: suddenly appear all the contradictions that accumulated in the economy in the previous period, first of all:

contradiction betweenproduction and consumption (hence the name overproduction crisis);

contradiction betweenlabor and capital (manifested, in particular, in the growth of unemployment).

other macroeconomicproportions (what we formulate as conditions of macroeconomic equilibrium, which manifests itself, in particular, in a sharp increase in savings compared with investment demand,primarily due to the accumulation of the depreciation fund, which was later paid special attention to by J.M. Keynes).

Thus, according to Marx, crisis (recession, recession) is a period of violent return to macroeconomic equilibrium (through the restoration of the private and general equilibrium). This return opens the way to the new cyclical rise economy. Then everything is repeated from the beginning.

Marx proved that cyclicality is a form of economic movement inherent in capitalism.

Marx believed that at the heart of the frequency of crises (i.e. the cycle is based on) periodic massive renewal of fixed assets... The period itself corresponds in terms of the average service life of the active part of fixed capital - industrial equipment.

Periods in the economy - These are cyclical, fluctuating and replacing each other phases of the economy, characterized by a certain duration of time, aimed at the development of the socio - economic system, and associated with the political and social life of a particular country.

The emergence of the economy is a natural process of the emergence of human civilization based on the natural need of people to improve their life and have material and other benefits based on a conscious civilized approach as humanity develops. In the history of economics as a science, many paths of its cyclical development have been traversed in different countries and states. And paradoxical as it may seem, the economic state of a single state has always been influenced not only by the transformation of civilization and advanced technical achievements, but also by periods of economic development.

The economy and its development have always been closely intertwined with historical facts, and more recently with influential events in the political arena. Therefore, along with the progressing dynamics, the economy can be cyclical with the presence of spontaneous unforeseen changes.

At the very first stages, periods of economic development were caused by the fact that warring nations and tribes tried to become owners and rulers of lands by attacking each other and appropriating other people's wealth. However, this approach always endangered the conquerors themselves, who were forced to further obtain benefits in a similar way, risking their lives and power.

Having some bad experience, strong states, which appropriated the right to consider themselves as such, began to enslave the prisoners and make them their slaves. They counted on the fact that the conquered peoples would meekly create benefits for the masters of life. But over time it became more and more clear that the effectiveness of slave labor did not meet the expectations of the conquerors. The slaves rebelled, did not work with full dedication and used every opportunity to turn the situation back on track.

For a literate and civilized society, it became more and more obvious that using methods of violence it was impossible to build a state with a strong, developed economy, and even more so to achieve material well-being, stability, ensure the movement of progress and increase the general living standard of the population. The conclusion that benefits must be created within the state, using the existing potential and resources, and not outside it, was considered the correct decision.

Economic periods

All periods in the economy are of a fairly long cyclical nature. And each cycle can last a certain number of years, being influenced by those factors on which the formation and formation of the economic sector depends. By economic cycles, we mean, in fact, the variation of the economic situation with periodic contractions - recessions and ups with a clear expansion and progression of economic processes. It is noticed that the cyclic economic character in the presence of one of the long periods, ultimately, it is replaced by another.

Cycles in the economy determine the presence of deterministic forecasting, which is based on completely logical, predictable events due to the action of repeated economic levers and prerequisites that create the ground during the period of economic recession or recovery. That is, recession is a cycle of economic development, and recovery is also its cycle.

As for the stochastic view of these processes, the cycles in in this case the cause of their occurrence are spontaneous or accidental under the influence of dominant factors in conditions that have developed favorably for a particular period.

Cycles in economics

Three dominant species are noted:

• Kitchina - the approximate time span is from two to three years.
• Juglar - the approximate time span is from six to thirteen years.
• Blacksmith (rhythms) - a period lasting from fifteen to twenty years.
• Kondratyev (waves) - a time interval from 50 to 60 years.

Cyclical phases of business activity

From an economic point of view, periods in the economy can be divided into four successive phases, which constitute the economy. It:

• recession;
• the lowest point (also called the bottom);
• and rise.

The onset of recovery (recovery) is usually observed after the lowest point and it can be characterized by systematic unhurried production growth in the presence of employment. From the point of view of leading economists, such a stage passes practically without increasing inflationary dynamics with innovative real implementations in economic processes and a fast payback period. During this phase, the actual realization of demand takes place, suspended during a recession.

The highest point of economic recovery (peak) is characterized by the presence of a small level of unemployment, which may not take place at all in a given period of time. The production equipment is loaded and works with maximum efficiency, and the country is fully involved and taken into account the existing labor and material reserves... However, as far as inflation is concerned, it is of a spasmodic nature, and for the most part in the direction of strengthening, although significant changes during the peak may not be observed. Further, there is a natural process of market oversaturation with an increase in the prerequisites for competition, gradually declines and the payback period is extended. This is followed by the use of long-term lending, the ability to quickly repay credit obligations is slowly decreasing.

The recession or recession phase is determined when production volumes decline and the demand for investments decreases. Business activity is falling, and unemployment is growing. A recession phase is considered recognized if this state of affairs lasts more than three months.

Depression or the bottom of the cycle of the economy can be called the lowest point that accompanies the production process and employment, which reaches almost a critical level. This phase, in spite of the absence of any regularities, cannot continue for a long period of time, since the laws of economics, one way or another, have their levers. And in this situation, the appearance of fluctuations is characteristic, gradually pushing the economy to a new stage of revival. Although there is a fact in history that the phase of the Great Depression in the 30s lasted for ten whole years, however, accompanied by bursts of business activity.

Economic periods and their cyclical nature

Attempts to theoretically explain the emergence of a cyclical history of the economy with ups and downs and intermediate links of activity converged in determining the patterns of influence of certain factors and prerequisites, taking into account the geographical location with the possibility of deriving benefits and the political position of the country at a certain stage of development or decline.

If we consider economic cycles in the economy in the form of technological developments, then the main condition leading to economic recovery is the presence of a sales market. As for countries with a predominantly agricultural direction, everything here depends on a productive or lean year and the ability to process and sell this crop with the least loss, in pursuit of the goal of making a profit. Changes in prices for raw materials, the presence of new deposits, the introduction and development of equipment for the processing of recyclable materials, and so on, also play a role.

We cannot exclude the possibility of force majeure circumstances, which, in addition to wars, riots and strikes, may include destructive natural disasters.

The spontaneity of the market economy can still be explained by the periodic occurrence of excitement against the background of the general economic situation and the anticipated forecasts. Therefore, there can be massive savings or waste of large enterprises, or entire agricultural or manufacturing sectors. The result of this approach is that supply and demand in sales markets begins to fluctuate, undergoes constant changes and employment. able-bodied population... These reasons take place regardless of the already existing moments, associated, for example, with changes in weather conditions and seasons, the average number of the population affecting both seasonal trade and agricultural work, as well as mining, automotive industry, cargo transportation, management organization and etc.

Impact of cycles on the economy

Concentrated monopolization of capital can lead to economic errors on a global scale, even in a number of developed countries. It goes without saying that everyone has a goal of getting from equity capital additional. According to investors, it is most profitable to invest in projects at the stages of growth or peak. As for the downturns, many are trying to refrain from investing in this period, explaining this by a decrease in the expected profitability.

In the absence of investor activity, there is a slowdown in activity in many production areas, the level of wages decreases and the solvency of the population as a whole falls. The demand for services and goods begins to decrease. A crisis affecting one of the economic sectors has a significant impact on the entire economic picture of a country or even several countries - it all depends on the globalization of the cyclical period.

One more the real reason, which determines the periods of economic development, taking place to be, is the withdrawal from circulation of a certain amount of capital in monetary terms. Accumulation occurs money, which are received by the owners as profit or dividends, which are deposited in their accounts, not coming either as investments in production, or as funds aimed at purchasing any goods or material goods. The population is also forced to look for ways to save money while lowering their own living standards. As a result of such transformations, the unemployment rate rises, the volume of production and consumption decreases, with a concomitant minimization of demand.

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