Some Aspects of Business Cycle Theory

Abstract

The presented study examines the economic nature of cycles and its key component — crisis — the initial phase of a business cycle.Aim. The study aims to determine the effect of business cycles and their alternation on the Russian economy.Tasks. The authors examine models that explain the functioning of medium-term business cycles; identify the major causes of financial and economic crises at the turn of the cycle; determine the consequences of modern business cycles for Russia in terms of its macroeconomic indicators.Methods. This study uses general scientific methods of cognition to examine the concept of business cycles and determine the causes and consequences of modern crises for the country’s economy.Results. Among the existing types of business cycles there are medium-term cycles, a global turn in which over the last three decades is caused primarily by the problems in the financial sector of the US economy. A comparative analysis of the current medium-term cycle and the previous one makes it possible to determine their quantitative and qualitative implications for the Russian economy. The 2008–2009 turn in business cycles pointed at the low efficiency of the Russian economic policy at the time, which had achieved great results during the previous cycle. The average gross domestic product (GDP) growth rate in Russia decreased not only in comparison between the two business cycles, but also in comparison with the global GDP growth rates. The modern world is currently in the final phase of the business cycle after a sustained growth, while the state of the Russian economy has long been characterized by stagnation in many industries, which poses a threat to the economic stability of the state on the verge of a new crisis.Conclusions. Examination of the concepts of business cycles as recurring periods of fluctuating business activity makes it possible not only to identify external and internal causes of economic instability during a cycle and at the turn of a cycle, but also to analyze the state of the economy in different phases of a cycle to improve the efficiency of the national economic policy.