Abstract
This study is concerned with the South African business cycle and makes use of the hazard function to determine the importance of duration for its analysis. This function gives the conditional probability that a state sustained through a previous period will end in the current one. The study estimates this probability for both economic downturn and expansion. At the 95 per cent confidence level, there is no statistical underpinning found for conventional ideas about the likelihood of an upturn or downturn in the economy over time. The duration of a business cycle does not help predict the turning point
Highlights
Thirteen times in the past fifty-three years, South African business has passed through a crisis
It is not surprising that business long thought of crises as abnormal events broUght on by some foolish blunder made by the public or the government (Mitchell, 1923)
Wider knowledge of business in other countries and better statistical data have gradually discredited the view that the crises are abnormal events, each due to a special cause
Summary
Thirteen times in the past fifty-three years, South African business has passed through a crisis. No two crises have been precisely alike and the differences between some crises have been more conspicuous than their similarities. It is not surprising that business long thought of crises as abnormal events broUght on by some foolish blunder made by the public or the government (Mitchell, 1923). Wider knowledge of business in other countries and better statistical data have gradually discredited the view that the crises are abnormal events, each due to a special cause. The modern view is that crises are but one aspect of recurrent business cycles. The term means two things (Schumpeter, 1935): o that fluctuations of values of economic quantities in historic time, do not display haphazard increase or decrease, but rather recurrence of either these values themselves or values related to them, and SAmMS NS Vol 4 (2001) No 1 o that these fluctuations do not occur independently in every such time series, but always display their immediate or lagged association with each other
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