Recession (economics): Difference between revisions
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== | ==Terminology== | ||
In economics usage, the term '''recession''' is conventionally defined (except in official pronouncements by the United States government) as two consecutive quarters of negative growth of [[gross domestic product]] (GDP). In the United States, the official designation of an economic situation as a recession is the responsibility of the National Bureau of Economic Research | In economics usage, the term '''recession''' is conventionally defined (except in official pronouncements by the United States government) as two consecutive quarters of negative growth of [[gross domestic product]] (GDP). In the United States, the official designation of an economic situation as a recession is the responsibility of the National Bureau of Economic Research | ||
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Before 1930, what are now termed recessions were referred to as "depressions". That term is nowadays reserved for exceptionally severe or prolonged recessions <ref>It has been suggested that the term depression is conventionally applied to a decline in real GDP that exceeds 10%, or one that lasts more than three years. [http://www.economist.com/finance/economicsfocus/displaystory.cfm?story_id=12852043]</ref>. | Before 1930, what are now termed recessions were referred to as "depressions". That term is nowadays reserved for exceptionally severe or prolonged recessions <ref>It has been suggested that the term depression is conventionally applied to a decline in real GDP that exceeds 10%, or one that lasts more than three years. [http://www.economist.com/finance/economicsfocus/displaystory.cfm?story_id=12852043]</ref>. | ||
==The causes of recessions== | |||
==What happens in a recession== | |||
==The treatment of recessions== | |||
==The costs of recessions== | |||
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==History== | ==History== | ||
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More commonly, recessions have been brought about by sudden increases of commodity prices, or credit shortages resulting from financial crises. The initial fall in demand usually prompts firms to run down their stocks, which depresses activity among their suppliers. The re-stocking that occurs when consumer demand starts to rise again tends to speed the recovery and, according to the "Zarnowitz rule", the steeper the initial downturn in activity, the more rapid will be the subsequent upturn<ref>Victor Zarnowitz: ''What is a Business Cycle?'', NBER Working Paper No. W3863, National Bureau of Economic Research, October 1991</ref> (but that rule may not hold for balance sheet recessions). | More commonly, recessions have been brought about by sudden increases of commodity prices, or credit shortages resulting from financial crises. The initial fall in demand usually prompts firms to run down their stocks, which depresses activity among their suppliers. The re-stocking that occurs when consumer demand starts to rise again tends to speed the recovery and, according to the "Zarnowitz rule", the steeper the initial downturn in activity, the more rapid will be the subsequent upturn<ref>Victor Zarnowitz: ''What is a Business Cycle?'', NBER Working Paper No. W3863, National Bureau of Economic Research, October 1991</ref> (but that rule may not hold for balance sheet recessions). | ||
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==References== | ==References== | ||
Revision as of 00:11, 10 August 2010
Terminology
In economics usage, the term recession is conventionally defined (except in official pronouncements by the United States government) as two consecutive quarters of negative growth of gross domestic product (GDP). In the United States, the official designation of an economic situation as a recession is the responsibility of the National Bureau of Economic Research [1], who define a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale retail sales" [2].
Before 1930, what are now termed recessions were referred to as "depressions". That term is nowadays reserved for exceptionally severe or prolonged recessions [3].
The causes of recessions
What happens in a recession
The treatment of recessions
The costs of recessions
- ↑ Recession: how is that defined?, Bureau of Economics, US Department of Commerce
- ↑ For a further explanation and some examples see What Is a Recession And Are We In One? Federal Reserve Bank of Cleveland October 2008
- ↑ It has been suggested that the term depression is conventionally applied to a decline in real GDP that exceeds 10%, or one that lasts more than three years. [1]