A critical view on the mainstream theory of economic cycles

Abstract World economy is frequently affected by fluctuations that occur recurrently with a certain periodicity. The predictability of economic fluctuations is low. Frequency and magnitude of cycles is generally reduced. Economy cycles belong to the economy’s DNA. It is measured by different indicators, but the most important is GDP. There are four types of economic cycles: Kitchin (Stocks), Juglar (Investment), Kuznets (Infrastructure), Kondratiev (Technological Innovation). Right now, science and technology are going through major changes that lead to an economic crisis of the Kondratiev model. Fiscal and monetary policy can alleviate fluctuations. Theories explaining economic cycles: overinvestment (misallocation of rare resources), Keynesiana (insufficient aggregate demand), monetarist (lack of monetary discipline), real business cycle (aggregate supply in change), neo Keynesiana (market imperfections), consensus (all factors considered). The financial cycle has been little considered so far. The financial cycle greatly influences the economic cycle, finances allocate resources and creates purchasing power. The financial cycle has a different structure than the economic one. It can use fiscal and monetary policies to direct it. The only paradigm that links the economic and financial cycles is the Austrian economic paradigm. In practice and current economic theory, there is a desire for a coincidence in time between the phases of the economic cycles of the various state entities of the United States and a convergence of evolution towards the same qualitative and quantitative characteristics. This implies an identity of cultural, historical, economic, political, and psychological evolution of the EU, which can not be achieved even between close regions of the same national state. The lack of barriers to the circulation of economic information (goods, services) between regions will lead to an approximate coincidence of economic evolution, but starting from the psychic structure of the inhabitants of a region, the cultural, religious and cultural heritage passing through the capital, the economic zones differ and to force them in different directions will lead to unnecessary fragmentation lines. The anticipated outcome of the study: It is desirable to leave economic areas to evolve in their own terms rather than leveling and uniforming them by economic manipulation techniques. It is preferable to use the method of scientific abstraction and deductive apriorism during the study.