Management crop380w 300x197 Economic Recessions Benefits and Causes

Recessions are often said to be caused by natural variations in the business climate referred to as the “business cycle” or the “economic cycles.” These are said to occur either for no known reason, or as a result of relatively rapid growth or stagnation due to technology, invention, emotional or perceptive climate, and other factories.

More concretely, though, recessions are often caused by rapid growth, followed by a rapid decline of that growth – such as in the housing market in 2008 (huge growth, irrational growth in many ways – a side effect of rapidity – for the preceding decade, followed by a stop of the growth), the dot-com bubble growing unexpectedly fast prior to 2001, etc. Rapid changes in economic climates of any sort often creates irrational behavior in the market, both in the sense of people expecting growth that isn’t coming, and in the sense of people making decisions simply based on previous trends.

Joseph Schumpter, a famous economist, theorized about business cycles, suggesting that in fact, there may be as many as 7 different business cycles which… More >>