aer.100.2.25 The Business Cycle in a Changing Economy Conceptualization Measurement Dating.pdfVIP

American Economic Review: Papers Proceedings 100 May 2010 : 25–29 /articles.php?doi 10.1257/aer.100.2.25 The Business Cycle in a Changing Economy: Conceptualization, Measurement, Dating By Allen Sinai* Modern business cycle analysis, measure- Would a rethinking and revisiting of the US ment, and dating began over 80 years ago at business cycle, given tightly interrelated global the National Bureau of Economic Research financial and real economic phenomena, lead NBER , culminating in Burns and Mitchell to a different conceptualization of its phases 1946 , an essentially descriptive empirical Does a changed structure of the labor market approach to business cycles. The approach and and in the composition of spending on goods data examined remain today as the empirical and services indicate a largely services econ- framework for business cycle analysis and were omy requiring different time-series for mea- based on the economy at the time—an econ- surement and dating? Are different indicators omy far different than the current one, particu- for cyclical turning points and perhaps depth larly as underscored by the “Great Recession” and duration called for rather than those now of 2007–09, the longest and deepest US down- in use, e.g., real GDP and industrial produc- turn since the 1930s. tion? Might some conclusions drawn about This last recession was marked by a clas- business cycles, ranging from the notion of a sic financial crisis and panic—the “financial “Great Moderation” to the information content factor” in the business cycle, which is always ascribed to real GDP, be altered present, more or less, especially at the upper Why should we care? One answer is a better turning point.1 The US downturn spread understanding of the business cycle. Another is throughout the global economy, particularly better prediction of its stages and risks for plan- duri