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Victor Zarnowitz has long been a leader in the study of business cycles, growth, inflation, and forecasting. These papers represent a carefully integrated and up-to-date study of business cycles, reexamining some of his earlier research as well as addressing recent developments in the literature and in history. In part one, Zarnowitz reviews with characteristic insight various theories of the business cycle, including Keynesian and monetary theories as well as more recent rational expectations and real business cycle theories. In doing so, he examines how the business cycle may have changed as the size of government, the exercise of fiscal and monetary policies, the openness of the economy to international forces, and the industrial structure have evolved over time. Emphasizing important research from the 1980s, Zarnowitz discusses in part two various measures of the trends and cycles in economic activity, including output, prices, inventories, investment in residential and nonresidential structures, equipment, and other economic variables. Here the author explores the duration and severity of U.S. business cycles over more than 150 years, and evaluates the ability of macro models to simulate past behavior of the economy. In part three the performance of leading, coincident, and lagging indicators is described and assessed and evidence is presented on the value of their composite measures. Finally, part four offers an analysis of the degree of success of large commercial forecasting firms and of many individual economists in predicting the course of inflation, real growth, unemployment, interest rates, and other key economic variables. Business Cycles is a timely study, certain tobecome a basic reference for professional forecasters and economists in government, academia, and the business community.
