Assignment: 2nd Essay: Business Cycle
For the past weeks we have studied the business cycles. According to all the theories we have covered, the purpose of this second assignment is to help you better understand theory and practice. We have covered the studies of a number of economists.
1. Explain what is the business cycle. Explain it, refer to it and clearly cite the authors covered in class
2. Define, compare and contrast the meaning of: Expansion, recession, depression, manias, bubbles, boom, bust, and euphoria.
3. Explain one factor that can be responsible for a crisis in trade and a crisis in finance/banking.
4. Pick one country
• Plot/graph the business cycle. Make sure you cover at least the last cycle
• Chose at the following indicator and explain it (leading, coincident, laggard, countercyclical, prociclycal)
o Trade Balance:
o Unemployment
o PICK a third one of your interest
o Make sure you clearly document the origin of the data source.
o Make sure all numerical data are based on the same time frame
• Plot/graph these against the business cycle
• Identify and explain at least 1 recessions and expansions found in your time series
o Make sure you use your economic indicators to document your explanation.
o Make sure you explain how and why these economic indicators justify your findings.
o Take this/these periods of time and analyze them making sure you explain at least 4 out of the 7 basic facts of the business cycle
o What is in your opinion the reason for at least ONE of the two recessions. Can you find an explanation for the "roots" of the recession?
- Was your recession accompanied by a depression?
- Do you think there was a "spirit of the time"? (please explain the meaning of this idea first)
• Finally, based on the data collected, please comment on the CURRENT economic situation of the country and what do you predict will happen to the economy of this country in the near future (let's say 9 to 12 months) and why do you believe that is the case.
Article: Western Banks Rush to Gain Deals om China's Belt and Road Initiative by Xinhua.
Text Book 1: Business Cycle Economics: Understanding Recvession and Depressions from Boom Bust by Todd A. Knoop.
Text Book 2: Mainias, Panics and Crashes: A History of Financial Crises by Robert Z. Aliber and Charles P. Kindleberger, seventh edition with Robert M. Solow.