ABSTRACT OF PAPER
Title: Business Cycles in the Economy and in Economics: A Statistical Analysis
Author: Geiger Niels, Kufenko Vadim
It is a well established and generally accepted fact that economic development in capitalist economies does not follow a steady trend line, but rather goes through business cycles instead. Within this context, it is sometimes pointed out that the popularity and spread of business cycle theory may be subject to some form of up- and downswings as well: As a prominent example, Keynes's General Theory (1936) was published shortly after the onset of the Great Depression and initiated increased interest in analysing business cycles from a new perspective. On the other hand, the postwar era with its relatively steady and high growth rates is sometimes said to be characterized by declining interest in business cycle theory, with miscellanies such as Bronfenbrenner's Is the Business Cycle Obsolete? (1969) even bearing the implication that the business cycle---and hence respective theories---may have become irrelevant. The present paper analyses this issue through a quantitative analysis by answering two closely related research questions: (1) whether or not there are particular patterns, especially of a cyclical kind, in the economic literature on business cycles, and (2) whether or not these are in any way correlated with movements and changes in actual economic activity. To tackle the first question, a bibliometric analysis (resembling the method used in Geiger 2014) of key terms related to business cycle theory in economics papers archived in JSTOR will be performed. This will shed light on the issue of whether or not the time series since the late 19th century show any regularity. JSTOR archives hundreds of journals in economics, finance and business reaching back over a century, which are available in digital form and can therefore be analysed automatically in big numbers. Data used are those from JSTOR's Data For Research database, where a full text search for the key terms is conducted within all relevant journals. Relative values are calculated (i.e. the number of entries containing a term relative to all items in the category) in order to determine whether or not a particular term appeared more frequently during a certain year or period. The results are long time series which are set into a historical context of seminal contributions in the literature in order to provide a general framework. Subsequently, the data are scrutinized by a statistical analysis, including a determination of trends and patterns in order to analyse the question of whether or not there may be cyclical movements in the time series. In a second step, these results are confronted with data on actual economic development in order to investigate the question of whether or not the theoretical literature follows trends and developments in economic data. Time series for GDP growth, unemployment and inflation rates in the USA and Western Europe are detrended by the usual methods in order to estimate business cycles. To then determine the connection between economic activity and developments in the academic literature, regression analyses are performed. The paper then concludes with a short discussion and a summary of the results. References: Bronfenbrenner, M. (Ed.) (1969). Is the Business Cycle Obsolete? New York: Wiley. Geiger, N. (2014). The Rise of Behavioural Economics: A Quantitative Assessment. Paper presented at the 18th Annual ESHET Conference on "Liberalisms: perspectives and debates in the history of economic thought", 29-31 May 2014 in Lausanne. Keynes, J. M. (1936). The General Theory of Employment, Interest, and Money, Volume VII of The Collected Writings of John Maynard Keynes. London (1973): Macmillan. ======= The paper is co-authored with Vadim Kufenko from the University of Hohenheim.
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