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. [...]
[...] Thus, when we come to the depressive phase of the cycle, the unfavorable sequences are stopped by the flexibility: frictional unemployment is lower in the USA than in France because managers can hire or dismiss more easily, because people are more mobile and go from one state which is in depression to another which is booming easily, etc. It can explain that the trend of the business cycle is nowadays superior in the USA. First, although the American growth rate is higher than the French one, there are some similarities. [...]
[...] A good example could be the recession at the beginning of the 1990s: it occurred in the USA in 1991, with a growth rate of - 0.2 two years later, in 1993, France knew a recession, with a growth rate of - Globally, we have already said that there is a difference of more than one point of percentage between the USA and France in terms of growth rate since the 1990s. The combination of Kondratiev's and Schumpeterian theories is not the only explanation for this difference. [...]
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