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Article: The business cycle: it's still a puzzle.
- Article from:
- Economic Perspectives
- Article date:
- December 22, 1998
- Author:
CopyrightCOPYRIGHT 1998 Federal Reserve Bank of Chicago. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Introduction and summary
Good fiscal and monetary policy requires a clear understanding of the workings of the economy, especially what drives the business cycle - the periodic ups and downs in economic activity. Since at least the late 1800s, a full swing from the start of an economic expansion to a recession and back to the start of another expansion has generally taken between two and eight years. Every citizen is keenly aware of the state of the economy, whether it is in prosperity or recession.
Everyone is so conscious of the business cycle because most sectors of the economy move up and down together.(1) This phenomenon, referred to as comovement, ...