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Tanima Dutta, Lovely Professional University Unit-24: Trade Cycles: Meaning and Types

Unit-24: Trade Cycles: Meaning and Types Notes

Contents
Objectives
Introduction
24.1 Types of Trade Cycles
24.2 Phases of Trade Cycle
24.3 Theories of Business Cycles
24.4 Hawtrey’s Monetary Theory of Trade Cycle
24.5 Samuelson’s Trade Cycle Model
24.6 Hicks’s Theory of Trade Cycle
24.7 Summary
24.8 Keywords
24.9 Review Questions
24.10 Further Readings

Objectives

After studying this unit, students will be able to:
y Know the types of Trade cycles,
y Know the Phases of Trade cycles,
y Know the Theories of Business cycles,
y Know the Hicks’s Theory of Trade cycle.

Introduction

Trade cycle is a part of capitalistic economy. It is related to cyclical booms and depressions. In trade
cycle there are wave like ups and downs of total employment, income, production and price levels.
Various economists have defined trade cycle in various forms. Definition given by Prof. Haverlar is
very easy. According to him, “In general meaning, trade cycle may be define like this that it is inter-
change of periods of prosperity and depression of good or bad trade.” Definition given by Keynes in
his book Treatise of Money is more clear- “Trade cycle is built by those periods of good trades whose
attributes are rising prices and low percentage of unemployment and those periods which do inter-
changes with periods of bad trade inclusive of falling prices and high percentage of unemployment."
According to Prof Estey, “Attribute of cyclical ups and downs is interchange of waves of expansion
and contraction. They do not have any fixed rhythm, but they are cyclical in this meaning that phases
of expansion or contraction come again and again on a similar form in often and sufficient way. ”
Important thing of doing target in situation of trade cycles is that any cycle is not completely regular
combined of uniformity, repetitiveness and expansion, i.e., it does not happen that for production
to reach from one high level to another always same time is needed and levels of production and
employment always move in one proportion at the turn points of top and the bottom. But such

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