Economic Cycle Volatility in the World Economy and Prospects for Global Economic Equilibrium Recovery

Konchyn, Vadym (2011): Economic Cycle Volatility in the World Economy and Prospects for Global Economic Equilibrium Recovery. Published in: Journal of Global Economy , Vol. http:/, No. Vol 7, No 4 (2011) (December 2011): pp. 227-248.

Abstract

The article examines the problems of cyclical economic development in the world economy. The trends in economic development and the degree of economic cycle volatility in the world during the 1970-2010 are analyzed. The phenomenon of the Great Moderation as a period of achieving the long-term relative equilibrium in the global economy on methodological and empirical level is represented. On the basis of correlation and regression modeling the trends of real GDP and changes in consumer prices for economies are identified, on which nowadays predominantly the restoration of economic equilibrium depends in view of maintaining the existing global economic order. Scenarios of restoring the global economic equilibrium within the neoclassical and neokeynesian vision are outlined and alternative modern concepts of global economy transformation in the context of attempts to solve the problem of worsening cyclical economic development and economic instability are presented.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic cycle volatility, Great Moderation, global economic equilibrium, neoclassical and neokeynesian approaches to economic policy, economic growth, growthonomics, inflationary and deflationary scenarios in global economy, steady-state economy, and technological singularity
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; F - International Economics > F0 - General > F02 - International Economic Order and Integration; P - Economic Systems > P5 - Comparative Economic Systems > P51 - Comparative Analysis of Economic Systems; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F59 - Other; F - International Economics > F0 - General > F01 - Global Outlook; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies

References

1. Baker G. Welcome to 'the Great Moderation' Historians will marvel at the stability of our era. - http://www.timesonline.co.uk/tol/comment/columnists/article1294376.ece

2. Boivin, Jean, and Marc P. Giannoni. Has Monetary Policy Become More Effective? - The Review of Economics and Statistics 88, (2006), pp. 445-462.

3. Clarida, R., J.Galf et al. (2000). Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory. – Quarterly Journal of Economics, vol. 115, no. 1, pp. 147-180.

4. Claxton Mervyn. A Critic of Herman Daly’s “Steady-State” Economy. June, 13, 2009. – 5 p. - http://www.normangirvan.info/port-of-spain-declaration-a-critical-analysis-mervyn-claxton/

5. Ćorić B. The Global Extent of the Great Moderation, 2010. – University of Split - http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1007984

6. Daly, H. and R. Costanza (2009). From a Failed Growth Economy to a Steady-State Economy. - In Encyclopedia of Earth. Eds. Cutler J. Cleveland (Washington, D.C.: Environmental Information Coalition, National Council for Science and the Environment

7. Dynan, K., Elmendorf, D. and Sichel, D. (2006). Can financial innovation help to explain the reduced volatility of economic activity’, Journal of Monetary Economics, Vol. 53, pp. 123-150.

8. Krugman P. (2009). The Return of Depression Economics and the Crisis 2008. – W.W. Norton & Company, New York, London. – p.59.

9. Lubik, Thomas A., and Frank Shorfheide, .Testing for Indeterminacy: An Application to U.S. Monetary Policy.- American Economic Review 94(1), (2004), pp. 190.217.

10. Pancrazi R. and M.Vukotić (2011). Overlooking the Great Moderation: Consequences for Monetary Policy.- http://www.robertopancrazi.com/OverlookingGM.pdf

11. Stock, James H. and Mark W. Watson, 2002. Has the Business Cycle Changed and Why? - in Mark Gertler and Kenneth Rogoff, eds., NBER Macroeconomics Annual 2002. Cambridge, MA: MIT Press, p. 159-218.

12. Summer P. M. What Caused The Great Moderation? Some Cross-Country Evidence. - http://www.kc.frb.org/publicat/econrev/PDF/3q05summ.pdf

13. The Global Economy’s unstable equilibrium. – Global Macro Monitor, March 2011 http://macromon.wordpress.com/tag/unstable-equilibrium/