4 Generating Economic Cycles 



unspecified time upon itself. The treatment is not 

 concerned with the academic segregation of causes 

 nor with the pedantries of mathematical formulae. No 

 measures of correlated changes are carried out, and no 

 definite clear-cut theory of cyclical causes is offered. 

 Somehow, somewhen, some of the indices of business 

 rise or fall, and somehow, somewhen, some other 

 indices may follow. The possibility of forecasting is 

 hinted, but in the best examples of this point of view 

 there is prudent restraint in particularizing. 



In the second of the typical current discussions of 

 cycles there is a full realization of the need of separating 

 causes and of seeking appropriate mathematical meth- 

 ods, but it introduces two embarrassing compromises: 

 First, it proceeds upon the assumption that there are 

 no known methods by which cyclical effects may be 

 separated from random effects and accordingly at- 

 tempts to treat as a whole the joint effect of cyclical 

 and random causes; Secondly, it arbitrarily defines the 

 combined effect as 'Hhe cycle." ''The cycle," in this 

 method of treatment, is the residue of the total effect 

 under investigation after the secular trend has been 

 eliminated. There is no further analysis of this residual 

 quantity for the purpose of seeing whether it may not 

 be composed, in part, of constituent cycles with separate 

 causes, but it is forthwith used — and used often with 

 success — as a means of practical forecasting. 



The third typical theory of cycles assumes as its 

 point of departure the necessity of segregating causes 

 and the use of methods to decompose total effects into 



