economic expansion
{{Short description|Upturn in economic activity}}
{{hatnote | Economic boom redirects here.}}
{{About|a particular stage in a business cycle|a discussion of longer-term increases in a country's economic activity|Economic growth}}
An economic expansion is an upturn in the level of economic activity and of the goods and services available. It is a finite period of growth, often measured by a rise in real GDP, that marks a reversal from a previous period, for example, while recovering from a recession.{{cite web |title=Economic Growth: What It Is and How It Is Measured |publisher=Investopedia |url=https://www.investopedia.com/terms/e/economicgrowth.asp |date=5 June 2024}}Compare:{{cite journal |title=Is the Economic Frontier Closed?|last=Lederer |first=Emil |url=https://www.jstor.org/stable/40981818 |journal=Social Research |location=New York |date=May 1939 |volume=6 |number=2 |pages=154–155 |jstor=40981818 |quote=I would define economic expansion as the increase of aggregate production from one production period to another. If the concept is defined in this general way it includes expansion that results from an increase in population, from better utilization [...].}} The explanation of fluctuations in aggregate economic activity between expansions and contractions ("booms" and "busts" within the "business cycle") is one of the primary concerns of macroeconomics.
{{cite book
|last1 = Ryan
|first1 = Cillian
|author-link1 = Cillian Ryan
|last2 = Mullineux
|first2 = Andrew W.
|editor-last1 = Snowdon
|editor-first1 = Brian
|editor-last2 = Vane
|editor-first2 = Howard R.
|editor-last3 = Backhouse
|editor-first3 = Roger E.
|year = 1997
|chapter = The ups and downs of modern business cycle theory
|title = Reflections on the Development of Modern Macroeconomics
|url = https://books.google.com/books?id=f_hiFXzQXaAC
|publication-place = Cheltenham
|publisher = Edward Elgar Publishing
|page = 136
|isbn = 978-1781008492
|access-date = 22 May 2023
|quote = [...] the primary focus of macroeconomics swung back from determining and manipulating the equilibrium level of output to the 'business cycle'.
}}
Definition
According to the four stages of a business cycle (expansion, peak, contraction, trough), an expansion is an upward trend when a country's economy experiences relatively rapid growth as measured by a rise in industrial production, employment, consumer spending, and utilization of resources.{{cite web |date=19 December 2023 |publisher=Investopedia |url=https://www.investopedia.com/terms/e/economic-cycle.asp |title=Economic Cycle: Definition and 4 Stages of the Business Cycle}}{{cite encyclopedia |publisher=Britannica Money |url=https://www.britannica.com/money/expansion-economics |title="expansion" |last=Bondarenko |first=Peter}} Whereas a recession is defined as two consecutive quarters of decline in GDP,{{cite web |title=Recession: When Bad Times Prevail |url=https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Recession |last1=Claessens |first1=Stijn |last2=Kose |first2=M. Ayhan |date=11 February 2019 |publisher=International Monetary Fund}} economic recovery and prosperity are two successive phases of expansion.
Economic expansion can be affected by external factors such as technological changes or weather conditions,{{cite web |last1=Colacito |first1=Riccardo |last2=Phan |first2=Toan |last3=Sablik |first3=Tim |url=https://www.richmondfed.org/publications/research/economic_brief/2018/eb_18-08 |number=18-08 |title=The Impact of Higher Temperatures on Economic Growth |date=August 2018 |publisher=Federal Reserve Bank of Richmond}} or by internal factors such as a country's fiscal policy,{{cite web |title=Fiscal Policy: Taking and Giving Away |last1=Horton |url=https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Fiscal-Policy |first1=Mark |last2=El-Ganainy |first2=Asmaa |publisher=International Monetary Fund |date=28 June 2019}} monetary policy, regulatory policy,{{cite web |title=Regulatory reform |publisher=Organisation for Economic Co-operation and Development (OECD) |url=https://www.oecd.org/en/topics/policy-issues/regulatory-reform.html |access-date=25 January 2025}} interest rates, the availability of credit, or other impacts on producer incentives. Global events, such as pandemics, may also influence the amount of economic activity in various countries.{{cite web |title=Overview: World Economic Situation and Prospects 2024 |url=https://www.un.org/sustainabledevelopment/blog/2024/01/overview-world-economic-situation-and-prospects-2024/ |publisher=United Nations |date=5 January 2024}}{{cite web |title=Chapter 1. The economic impacts of the COVID-19 crisis |publisher=World Bank Group |url=https://www.worldbank.org/en/publication/wdr2022/brief/chapter-1-introduction-the-economic-impacts-of-the-covid-19-crisis |series=World Development Report (WDR)}}
Economic expansion and contraction refer to the overall output of all goods and services, while the terms "inflation" and "deflation" refer to rising and falling prices of commodities, goods and services in relation to the value of money.
From a microeconomic standpoint, expansion usually means enlarging the scale of a single company or firm. This can be achieved through internal actions—opening branches, finding new customers, inventing products, developing lines of business—and through integration, for example, taking over or merging with other companies.{{cite web |title=Micro and Macro: The Economic Divide |last=Rodrigo |first=G. Chris |publisher=International Monetary Fund |date=15 June 2017|url=https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Micro-and-Macro }}
References
{{Reflist}}
External links
- [https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions "US Business Cycle Expansions and Contractions", National Bureau of Economic Research]
{{United States – Commonwealth of Nations recessions}}
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