TRADE CYCLES-CONCEPTS- EFFECTS-CONTROL

Trade Cycles are just the name of Prosperity and Adversity; good trade and bad trade

Hebeler
2

Trade Cycles are the fluxuations in the aggregate economic activity. Any trade cycle starts from depression, enters into revival(recovery), then converts itself into boom and finally turns into recession.

W.C.Mitchel
3

PHASES OF A TRADE CYCLE

A typical cycle is generally divided into four phases: -

1. Depression or Downswing (Trough) 2. Revival or Recovery or Lower turning point. 3.Expansion or Prosperity or the Upswing (Boom) 4. Recession or Upper-Turning Point (Contraction)
4

PHASES OF TRADE CYCLE (1)

Y
Boom
Economic Activity
Revival

Recession

Depression

Time

PHASES OF TRADE CYCLE (2)

1.Depression or Downswing (Trough)

Prices

Consumption
Income Wages

Decreased

Employment

2. Revival or Recovery or (Lower turning point)

Prices

Consumption
Income Wages

Increased

Employment

3. Expansion or Prosperity or the Upswing (Boom)

Prices Consumption Income Wages Employment

Increased

4. Recession or Upper-Turning Point (Contraction)

Prices

Consumption
Income Wages

Decreased

Employment

10

PROPERTIES OF TRADE CYCLE

11

Aggregate Economic Activity

12

The Period of Phases

13

The Short Joseph Kitchin Cycle of 40 months

14

The Long Clement Juggler Cycle of 9 years

15

The Very Long Kondratieff Cycle of 50 years

16

Simon Kuznets Cycle of 16-22 years or 7-11 years

17

The Nature of Diffusion of Effects

(wages, prices, rents, profits, consumption, savings and investment)

18

International in Nature

19

SOCIAL EFFECT

20

HOW CAN TRADE CYCLE BE REDUCED?

21

FISCAL POLICY

22

MONETARY POLICY

23

BUFFER STOCK SCHEMES

24

STATE CONTROL OF PRIVATE INVESTMENT

25

I.FISCAL MEASURES

During Inflation/Boom

26

INCREASE IN TAXES

27

DECREASE IN PUBLIC EXPENDITURE

28

INCREASE IN PUBLIC DEBT

29

Contd

During Depression Decrease in Taxes Increase in Public Expenditures, and Decrease in Public Debt

30

II. MONETARY MEASURES

31

BANK RATE POLICY

32

OPEN MARKET SYSTEM

Sale/Purchase of Bonds and Securities in the market

33

CHANGES IN RESERVE RATIO

Cash Reserve Ratio

34

III. BUFFER STOCK SCHEMES

Official Purchase and sale of food grains according to the market fluxuations

35

IV. STATE CONTROL OF PRIVATE INVESTMENT

J.M.KEYNES VIEW MAY BE ADOPTABLE

36

WHY DID TRADE CYCLE APPEAR IN THE ECONOMY?

37

THEORIES OF TRADE CYCLES

38

SUNSPOT THEORY

39

PSYCHOLOGICAL THEORY

40

THEORY OF UNDER CONSUMPTION

41

HAWTREY THEORY OF TRADE CYCLE

42

JOSEPH SCHUMPETERS THEORY OF TRADE CYCLE

43

Friday, October 11, 2013

D.B.Naidu
92480-05303 dbnaidu@hotmail.com

44