Comparison between the economic cycles and the growth rates in the USA and France

Résumé du document

The business cycle is a constant in all the world economies since the Industrial Revolution occurred. By “business cycle”, we mean the fluctuations of the growth rate of the economy, which always works on the “Peak – Recession – Trough – Recovery” scheme. The main cycle is the one known as the “Juglar cycle”, from the name of the 19th century French economist who theorized it. It lasts approximately 10 years, during which the economy comes from growth to recession. Beside this Juglar cycle, there is also a larger cycle, which is called “Kondratiev cycle”, this time from the name of a Russian economist. It deals with the long run: a Kondratiev cycle lasts 50 or 60 years and is composed of 25 (or 30) years of expansion and 25 (or 30) years of weak growth. Another type of cycle is the Kitchin cycle, which deals with the short turn but it is less interesting to analyze long period growth. The Juglar and the Kondratiev are relevant.

Extraits

[...] Comparison between the economic cycles and the growth rates in the USA and France The business cycle is a constant in all the world economies since the Industrial Revolution occurred. By “business cycle”, we mean the fluctuations of the growth rate of the economy, which always works on the “Peak Recession Trough Recovery” scheme. The main cycle is the one known as the “Juglar cycle”, from the name of the 19th century French economist who theorized it. It lasts approximately 10 years, during which the economy comes from growth to recession. [...]

[...] We can only compare the growth trend of two economies. However comparing the cycle itself is relevant: it is a good way to apprehend the specificities of a national economy. Generally, the Kondratiev cycle is the same in every country. But the Juglar cycle is a priori a national cycle. Today in France, we often speak about the United States of America (USA) as a model: the USA is the most performing economy among the developed countries, whereas France is well-known for its problem of “slack growth”. [...]

[...] It was especially the case in France, where the growth rate was very high, because of the converging process, whereas this statement is less true for the USA. But after 1973, the Keynesian recipes seem not to work anymore, and a lot of countries came back to more liberal policies (we mean liberal in the sense the word is used in France, that is to say market-orientated). And, in the last 2 decades of the 20th century, we notice a return of crisis or a “return of cycles” (even if they had never really disappeared). [...]

[...] Here, the only thing that we can to do is to compare the growth trend. Let's do it simply quickly so that we can focus, next, on the contemporary period. It appears that the American trend is a little bit higher than the French one: the American gross domestic product (GDP) surpassed the French one during the 19th century. In spite of the 1929 crisis which was stronger in the USA than in Europe, in the first part of the 20th century, the USA became the World first economy, whereas France, as all the European countries, was ruined by the two wars. [...]

[...] However, the national budgets are constraint by the Stability and Growth Pact, which implies strict limits to deficit and national debt. Whatever, a national Keynesian policy would not be that efficient, because France is an opened country: the openness rate is more than which means that 25% of the expenses increase would finance abroad growth. A Keynesian policy can only be efficient at the European scale, but we have said there is not a real European budget. That is why economists speak of the European impossible “policy mix”. [...]