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Comparison between the economic cycles and the growth rates in the USA and France

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  1. Introduction
  2. The French and the American cycles
  3. A look into the Kondratiev cycle
  4. Analysis of the Juglar cycle
  5. The combination of Kondratiev's and Schumpeterian theories
  6. Conclusion
  7. Bibliography

The business cycle is a constant in all the world economies since the Industrial Revolution occurred. By ?business cycle?, we mean the fluctuations of the growth rate of the economy, which always works on the ?Peak ? Recession ? Trough ? Recovery? scheme. The main cycle is the one known as the ?Juglar cycle?, from the name of the 19th century French economist who theorized it. It lasts approximately 10 years, during which the economy comes from growth to recession. Beside this Juglar cycle, there is also a larger cycle, which is called ?Kondratiev cycle?, this time from the name of a Russian economist. It deals with the long run: a Kondratiev cycle lasts 50 or 60 years and is composed of 25 (or 30) years of expansion and 25 (or 30) years of weak growth. Another type of cycle is the Kitchin cycle, which deals with the short turn but it is less interesting to analyze long period growth. The Juglar and the Kondratiev are relevant.

[...] In fact, as French economist Jean-Paul Fitoussi explains (La politique de l'impuissance), the orientations of economic policies are often determined by History : the USA has been traumatized by the 1929 crisis and by the unemployment that it entailed, so their policy is growth-and-employment-orientated ; the biggest economic traumatism in Germany's history has been the hyperinflation in 1923, so the Deutsche Bundesbank has always struggled inflation and the European Central Bank (ECB) is doing so now. As a consequence, the ECB is obsessed by its fight against inflation and does not favor growth and employment, inflation and employment often being contradictory aims for an economic policy (Philips Curve). [...]

[...] And why would not we have high growth rates as in the USA in France? Maybe France has not entered the phase A of the Kondratiev yet: first because we are late in the implementation of those technologies, but overall because, as the French economist Philippe Askenazy remarks, we have not ?finished? the reorganization of work that those technologies imply. In fact, to say it simply, Internet is a good way to increase economic performance only if it is accompanied by a change in the way to organize work. [...]

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