VIII Международная студенческая научная конференция Студенческий научный форум - 2016

It is historically noticed that in economy there are cyclic fluctuations. Scientists decided to reveal a problem and to define the reasons of these fluctuations, their consequences and possible ways of influence on this process. The set of various theories was developed; some scientists even declared possibility of elimination of fluctuations. The reality was stronger than scientific forecasts. Now none of serious scientific economists do not challenge existence of cyclic dynamics of market economy.

Now the basis of market relations in Russia are in the process of formation, and process of reproduction gains more and more cyclic character. The topic of business cycles will be interesting not only for specialists theorists, but also to wide layers of practical workers, and first of all businesspersons, heads of the state enterprises, many government figures and the whole institutes.

The economic cycle covers various aspects of life of society. It gets everywhere into production, construction, employment, the income, on stock exchange, and into policy. Even such not economic events as birth rate and marriages the crisis.

The business cycle in different degree influences individuals and separate sectors of economy. So, for example, from recession most of all suffer workers and the industries which are letting out factor of productions, consumer goods of the long-term use, construction. The productions, which are letting out consumer goods of short-term use usually less react to recession.

Entrepreneurs are based on certain assumptions about the future when deciding to attract investment and amount of output. If they believe that next year will bring recession, they will try to reduce the investment now. When, on the contrary, expansion is expected and significant price increases, then hurry to buy goods, to expand production and construction.

Ability to expect consequences of this or that factor means opportunity for the businessman in advance to take the measures allowing to smooth negative impact in case of recession or stimulating measures in case of recovery.

Businessmen’s of all developed countries are faced constantly by a problem about safe capital investments therefore studying of economic cycles from the point of view of forecasting increase or an economic decline is one of the most important problems of modern economy.

The purpose of this paper is to develop the topic «Economic cycle development. Economic cycle and its phases.»

Theoretical basis of the study of economic cycles.

The concept of the economic cycle

The term an economic cycle means expansion and recessions of economic activity following one by one within several years. Economic cycles significantly differ from each other on duration and intensity. There is no exact formula for forecasting of duration and temporary sequence of economic cycles.

In the theory of an economic cycle, it is accepted to distinguish a cycle and a trend. If we look at macroeconomic indicators of development of any country for long-term period, we will find out that regardless of economic fluctuations, recessions and expansion, which alternate through certain periods, the country reached a certain economic level. Let us represent it on graphics (according to fig. 1) in which real GDP (at the potential level) the beginnings of the period of the research t1 and real GDP of the end of the period of the research tn designated. We will receive the Pt line which it is accepted to call a trend of real GDP. The line of a trend is under construction in such a way that fluctuations of real GDP on a long-term interval of time smooth out. Extrapolating the received line, we can give the forecast of a trend of potential GDP on remote the perspective economic of cycles.

Figure 1

¹

Economic cycles have certain phases: Peak, Recession phase, Trough -Phase of a depression (stagnation), 4. Recovery phase.²

1. The peak or peak of the business cycle , is the " highest point" of economic recovery . In this phase, the unemployment rate usually reaches its lowest level or disappears altogether , manufacturing facilities operate at maximum or close to the load , that is, are utilized in the production of almost all available in the country of material and labor resources . Usually though not always , during the peak intensifies inflation .

2. Recession phase. An inevitable consequence of boom — turn in development of a cycle when increase in production is replaced by its recession. It testifies to approach of a phase of crisis. Labor demand falls. It means unemployment growth, scientific research institute of duration of working week. Demand for raw materials, and then and the offer of raw materials falls. Sharp reduction of profits is observed- interest rates decrease. At last, if recession deep and a long-lasting, happens decrease or slow down scientific research institute of growth of the commodity prices.

3. Depression phase. This phase is characterized by the following indicators: falling GDP and rising unemployment, the investment is close to zero. Therefore, in this period, the economy is characterized by stagnation in manufacturing, weak trade, the presence of a large mass of free money capital. The system overcomes the lowest point of the cycle called the trough. After this point the movement of all economic indicators change direction, incomes and employment are beginning to grow again recovery. When GDP enterprise culminated last cycle and rising even higher economic growth begins.

The main phase of a cycle is crisis (output gap) as it represents the mechanism of destruction of old proportions creating conditions for future development of production. In a phase of crisis, the commodity prices of outdated production fall, interest rates, share prices fall, the profit of the companies goes down, and many of them incur losses that causes a wave of bankruptcies. The main phase of a cycle is crisis (output gap) as it represents the mechanism of destruction of old proportions creating conditions for future development of production. In a phase of crisis, the commodity prices of outdated production fall, interest rates, share prices fall, the profit of the companies goes down, and many of them incur losses that causes a wave of bankruptcies. However, the crisis economy does not mean bad economy. In the crisis, possibility of its overcoming is put. Crisis first eliminates the immediate cause — over-accumulation of capital, as in a crisis phase economy from decrease from part of fixed capital by its depreciation and even destruction. It stimulates the beginning of mass updating of the production capital on a new technical basis. In the conditions of crisis, any businessperson cannot wait for full physical wear of cars and the equipment — crisis compels all to carry out universal replacement of many elements of fixed capital. As a result new demand thematically is born. For crisis as it was already noted, the depression follows. Externally it is shown in delay of rates of recession, stagnation in bankruptcies, reduction of commodity stocks, etc. Its reproduction function — the adaptation to the new built proportions. On a depression phase the purpose facing firms (maximizing profit) again becomes tempting as in production there was a decrease in expenses.

4. Recovery phase. At recovery the prices gradually grow, the salary, employment, interest rates and so forth, are carried out the mass investments providing expanded reproduction. Thus, function of recovery consists in implementation of expanded reproduction. At rise when dynamics of production is entirely subordinated to aspiration to profit , the offer advances demand more and more, creating conditions for future recession.

Character and the maintenance of typical lines of crisis undergo certain changes in process of development of market economy. At the time of K. Marx and up to the middle of the XX century the main (classical) signs of crisis were: 1) falling of the prices, overflow of the market goods, i.e. overproduction of goods. For example, at an economic crisis of 1847 of the price fell to 17%, during crisis of 1929-1933 – for 54–77%; 2) sharp reduction of outputs (usually for 10–15%), and in 1929 – for 46%). Reduction in production – the most characteristic line of crisis; 3) violation of a circulation of the capital, reduction of capital investments, payment arrears crisis, deficiency of cash, falling of price of securities, sharp growth of loan percent; 4) death of a set of small and medium-sized enterprises, unemployment growth, reduction of wages, reduction of solvency of the population.

There are distinctions in extent of negative influence of economic crises on separate branches. As even during the periods of crises each person needs to eat, drink and put on, in the branches delivering subjects of daily consumption, production is reduced in rather smaller scales. At the same time at an adverse economic situation and forecasts of recession consumers can nearly stop completely purchases of the equipment or household appliances waiting for the best times. Respectively falling of production in the metallurgy, a heavy engineering, branches making refrigerators, cars, etc. happens, as a rule, bigger, than in the light and food industry.

There are distinctions in reaction to crisis of monopolies and the monopolized economy sectors. If in branches with a high level of production concentration during crisis the prices almost do not fall at sharp reduction of outputs, in branches to low concentration there is a considerable falling of the prices at rather small decrease in volumes of production. In other words, monopolies, leaning on the economic power, with much smaller expenses (or nearly without those) can endure crisis.

The depression follows crisis. This phase of a classical cycle is, as a rule, more long in time, than a phase of crisis. For a depression freezing of economy in that state in which it appeared in a crisis phase is characteristic. This stagnant state of the economy: falling of production stops, but its growth is not present. Against the general stagnation only a size of loan percent significantly changes. It falls because the "survived" businessmen have free money owing to low costs of production which size is determined now by the salary which "stiffened" at the lowest level.

Dialectics of economic development such is that factors of crisis become in a depression phase factors of transition of economy to the third phase of a cycle – recovery.

In a depression phase when commodity stocks and the prices are stabilized, businessmen start adapting to low prices by means of search of ways for decrease in financially production expenses. Crisis shows technical and technological insolvency of fixed capital for the solution of the specified task. Replacement and updating of fixed capital that tell us to t beginning of a phase of recovery begins. This process is promoted also by the expansion in consumption stimulated by low prices.

Phase recovery is characterized primarily by the expansion of the means of production. In other words, the principle of the multiplier takes effect, which causes an increase in employment, rising wages, income and consumption. These changes mean the entry into force of the principle of the accelerator. Interaction of multiplier and accelerator leads to a new takeoff of the economy begins its recovery. At the stage of revitalizing the economy reaches pre-crisis level.

As criterion of transition from recovery to rise achievement of pre-crisis level of production serves. Behind it the phase of economic recovery begins.

Expansion – blossoming of all forms of the capital, growth of volumes of the credits, loan percent, stock market, capital investments, an investment and consumer demand. Increase in production conducts to increase of demand for goods that in turn causes increase in prices. In a rise phase, production exceeds a pre-crisis maximum. Increase in production leads to that it again prepares base for crisis, i.e. develops into overproduction. However, at first this fact does not prove yet. Trade continues some time to buy the huge mass of goods which are not realized any more, i.e. arises, so-called, fictitious demand. Then the next crisis bursts

Types of Business cycles

Not all cycles in reality are similar, each has the specific features, interlacing. In the period between crises, as well as in the sea in a clear weather, disorders, corrections in the form of partial, small and intermediate recessions that gave the grounds to speak about different types of economic crises are possible.

The modern economy, generally operates with four types of cycles: short-term, medium-term, construction, semicentennial.

In tab. 1 six most often mentioned are marked out: the economy operates mainly with four first of them.

Table 1 Main types of cycles

Type of cycle	cycle Length(in years	The main features
Kitchin cycle	2–5	The value fluctuation reserves of GDP, inflation, employment, trade cycles
Zhuglar cycle	7–12	Investment cycle fluctuations in GDP, inflation and employment.
Kuznets cycle	16–25	Housing construction aggregate demand income
Kondratiev cycle	40–60	Technical progress, structural changes

Due to the updating has separate elements of the capital allocate Kitchin with an average duration of 3 years cycles 4 months. They are connected with fluctuation of world reserves of gold. E. Hansen connects Kitchin's cycles with unevenness of reproduction of working capital, and U. Mitchell – with fluctuations of monetary circulation.

Zhuglar's cycles. "Business cycle", "industrial cycle", "intermediate-term cycle". The first industrial crisis burst in England in 1825 when mechanical production reached an ascendant position in metallurgy, mechanical engineering and other leading branches.

Smith's cycles. "long fluctuation" In 1930 years in the USA appeared researches so-called "a construction cycle". In 1946 S. Kuznets came to a conclusion that indicators of the national income, consumer expenses, gross investments into the equipment of production appointment, and also into buildings and constructions find the interconnected twenty years' fluctuations. Thus he noted that in construction these fluctuations possess the biggest relative amplitude.

Kondratyev's cycles. the Russian scientist N. D. Kondratyev (1892-1938) who published some fundamental works in the field of business cycles made the greatest contribution. He stated results statistical economic research, the indexes of the commodity prices, interest rates concerning dynamics, a rent, a salary, production of the major types of production etc.

Kondratyev connected the beginning of "big" rise with mass introduction in production of new technologies, with involvement of the new countries in the world economy, with changes of volumes of gold mining. Thus the overall picture of rise was described as follows: introduction of technical innovations goes in parallel with expansion of investment process which, in turn, stimulates the production and demand promoting increase in prices. During this period unemployment decreases, the salary and labor productivity grow.

The theory of long or big cycles has special value as gives the chance to predict development of market system far forward, in the long term, and by that to increase her adaptability, damping future shocks.

Each "big" rise is followed by short period when the economy as if prepares for the forthcoming long recession, but at the same time visibility of prosperity remains: people are still full of hopes, easily use borrowed funds. As the real situation any more not that, occurs a debt heap which at any time threatens with crash..

Definition of a phase of a cycle, which there passes the economy, is actual for any subject of economic activity. Forming of the correct economic policy of the enterprises and adequate behavior of consumers possibly on condition of right judgment of the current economic situation. In my opinion, identification of a phase of a cycle is carried out through research of tendencies of a certain set of macroeconomic indicators, however according to specifics of a national business cycle calls into question the characteristic of a phase through a standard number of indicators.

The specifics of development of national economy caused late in comparison with the countries of the West, formation of a market economy, being imposed on the taken roots elements of a planned economy, allows to mark out distinctive features economic a cycle of Russia as one of which its short-term character acts. For the first time short-term business cycles with the period of 3-4 years were opened by D. Kitchin. He explained existence of such cycles with fluctuations of world reserves of gold. In the modern economic theory the mechanism of emergence of short-term cycles is caused by temporary logs in the movement of information necessary for acceptance business of decisions. Increase of demand for production of firm provokes making decision on bigger utilization of capacity, i.e. on increase in outputs; extension of the offer leads to satisfaction of demand, its decrease and formation of excess stocks. The decision on decrease in outputs made proceeding from current situation is realized with some temporary log since information on excess of the offer over demand arrives with a certain delay. In addition, time log is extended for processing of this information, implementation of the decision on decrease in utilization of capacity and elimination of excessive stocks in a warehouse.

Determining the economic situation in Russia

Indicators of analysis

From D. Kitchin's cycles the Russian business cycle took only the name, the reasons of recurrence aren't covered in delay of information. Main reason of short-term character of a cycle of Russia is still transitional character of national economy. The period of a modern business cycle of Russia makes 3–5 years during which the economy passes all four phases: crisis, depression, recovery and rise. (according to L.S. Bychkov)³

Each phase of a business cycle is characterized by a certain change of macroeconomic indicators: volume of gross domestic product, rates of inflation, unemployment, and export volume.

Detailed research of macroeconomic indicators will allow to establish character of the current phase of a business cycle of Russia, will give the chance to orient to economic entities.

On interrelation of macroeconomic indicators with the general economic dynamics allocate pro-cyclic (grow in a phase of rise and fall in a crisis phase), anti-cyclic (fall at rise in economy and grow in crisis) and acyclic indicators (have no certain behavior in any phase of a business cycle

On time of passing of rotary points of a business cycle it is accepted to allocate: the advancing indicators — the direction of their movement changes earlier, than the cycle phase changes; coinciding indicators — their changes coincide with changes of economic activity; the late variables — changes of these variables come after a phase of a business cycle.

Change of GDP coincides with course of phases of a business cycle — it is a coinciding and pro-cyclic indicator. In a phase of rise increase in production is observed.

Graph 1 (Real GDP in Russian Federation)

Graph 2 ( Real GDP YoY% in Russian Federation)

Rate of inflation — an indicator pro-cyclic, but it changes with some delay, increases in the period of a recovery phase, reaches a maximum in a rise phase, then falls in a depression and crisis, it is the advancing indicator.

Graph 3 (Rate of inflation in Russian Federation)

Unemployment rate — an anti-cyclic indicator, it sharply increases at reduction of economic activity, i.e. in phases of crisis and recession, and slowly falls in phases of recovery and rise.

Graph 4 (Unemployment rate in Russian Federation)

Export volume — a pro-cyclic indicator, it grows in a rise phase, in a crisis phase — decreases.

Graph 5 (Export volume in Russian Federation)

These an indicator are the basic macroeconomic indicators characterizing development of economy of any country, the level of volume of export is included in this group for national economy since growth of volumes of export acts as the main factor of its development.

Determining the state of the economic cycle in Russia

The considerable share of the oil and gas income in the budget of the country translates the volume of export to the category of basic indicators of development of national economy. E. S. Bobin points to dependence of a business cycle of Russia on volumes of export of resources, for overcoming of negative tendencies of development of economic system it is necessary to identify an economy cycle phase in time. Expediently in this context to investigate changes of certain macroeconomic indicators. We will analyses the chosen indicators for establishment of a modern phase of a cycle in the Russian economy

The value of GDP decline (according to graph 2) by 2% in 2014, characterized by a fall in relation to the previous year, and did not show a positive trend.

Inflation in 2014 has increased significantly and remained at that level in 2015, due to the negative impact of political factors on the economy.

The unemployment rate in 2014 was almost unchanged compared with last year, which serves a positive factor, not a sign of the deepening economic crisis. Exports plummeted after 2011 city, and there are no trends to restore the previous level

According to the classical approach to the economic cycle, macroeconomic performance in 2014.(Table 1) do not characterize the phase of the economic crisis, but rather a phase of depression, a crisis can be considered in 2013 of five considered. There was a drop of GDP, interest rates, rising unemployment and a decrease in exports. Based on the analysis of macroeconomic indicators and assuming that in 2014 in Russia was either a crisis or depression, consider the characteristics of these phases in more detail.

Phase depression characterized by the following features: stagnation in industrial production, slowdown in trade, the presence of a large mass of free money capital.

Analysis of indicators Table. Two does not allow a clear conclusion regarding the phase of the economic cycle in Russia. Indicators such as the level of prices for goods and services, the volume of foreign trade, income levels, indicate the presence of crisis tendencies in the economy, but an increase in the volume of lending to households, the growth of the industrial production index indicate the presence of a stable functioning of the branches of the national economy.

Conclusion

Contradictions were opened in the study of various indicators of the Russian economy suggests peculiarity of its development, emphasize the specificity of the business cycle in the national reality that speaks of the need to allocate a number of indicators showing about a particular phase of the economic cycle, differs slightly from the set of indicators used to determining the phase of the cycle in the countries with developed market economies.

According to the conducted analysis of macroeconomic indicators for Russia in 2014 it was a year of depression, with certain elements of the crisis, growing by the end of the year. The nature of the Russian phase of the economic cycle in 2016 depends on many factors, both external and internal, but given export-oriented nature of the national economy, the role of external factors, such as the phase of the cycle of the world economy, the level of energy prices. The preservation of the old and the establishment of new trading relations will prevail. Based on the analysis of macroeconomic indicators and the current realities of economic and political position of Russia in the international arena, we can assume that in 2016 the national economy is waiting for depression.

List of literature

I. Official documents:

II. Monographs, collective works, collections of scientific works:

1.Paul Krugman, Robin Wells Macroeconomics. Textbook 2008 – 157p.

2. Business Cycles in Central Asia and the Russian Federation Nurbek Jenish WORKING PAPER №15, 2013 -

III. Articles from periodicals:

3. Identification of the economic cycle in 2014 IN RUSSIA L.S. Bychkova

4. I.O. Koptelov economic cycles and the essence of its manifestations

5. Bulletin of the Chelyabinsk State University. 2012. № 10 (264p). Economy. Vol. 38. S. 24-28.

IV. Internet resources:

6. Library materials on economic issues - // Electronic resource: http:// www.libertarium.ru/library

7. Federal State Statistics Service — // Electronic resource: http://www.gks.ru/

8. The official website of the Central Bank of Russia (analyzes)— // Electronic resource http://www.cbr.ru

Appendix

Table 1Trends of economic performance in 2014

Index	Dynamics compared with the previous period
Prices of goods and services	Growth
trade turnover	The decrease compared with the previous period
Income of the population	Reduction
Lending population	Increasing the volume of mortgage lending
Industrial production index	Increasing

1^ Paul Krugman, Robin Wells Macroeconomics. Textbook – 159p

2^ Bulletin of the Chelyabinsk State University. 2012. № 10 (264). Economy. Vol. 38. S. 24-28.

3^ Identification of the economic cycle in 2014 IN RUSSIA L.S. Bychkova

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