Business Cycles in History

This paper is a thoroughly revised and extended version of an
article firstly published in the anthology "Moderne
Wirtschaftsgeschichte" (München: Oldenbourg) in 1996. This book is
an introduction to modern economic history for historians and
economists. Accordingly this paper has to two objectives: Firstly,
it presents economic theory explaining business cycles to
historians. Secondly, for economists it illustrates both the
possibilities and problems to detect and understand business cycles
in the past. The paper is organised as follows: Section 1 sets the
scene. It describes the approach of business cycles and provides a
number of essential definitions. The next section shortly
illustrates business cycles in the past 200 years in Germany (2).
Section 3 deals with business cycle theory. To start with, it
highlights the long tradition of theories that have sought to
explain business cycles (3.1). Secondly it explains the "standard
paradigm" (3.2). Thirdly it reviews the latest developments in
business cycle theory (3.3). Section 4 discusses the application of
business cycle theory in historical research. The last section
deals with open questions and unsolved problems from a historian's
point of view.