BUSINESS CYCLE HETEROGENEITY AND ANECDOTAL EVIDENCE OF GENERAL TREATMENTS FOR SPECIFIC ECONOMIC PROBLEMS

This paper explores the behavior of macroeconomic authoritative agents in developing general policy prescriptions to correct undesired macroeconomic outcomes. The investigations include some examples and empirical evidence of widely accepted policy responses as remedies that do not address specific economic problems but instead simply affect desired changes in the indicator variables. The Business Cycle Heterogeneity Hypothesis (BCHH) is introduced, and policy actions are explored for dealing with the historical macroeconomic cases presented. These historical accounts confirm underlying causes of undesirable macroeconomic outcomes, and also confirm that policies designed to provide corrective remedies have indeed produced predicted changes in the indicator variables. Yet, these same policies also created abnormal behaviors, or side effects, in response to the policy's stimuli. The paper concludes with some suggestions for how recognizing heterogeneity in business cycles could be used to develop specific, more effective, and less disruptive corrective actions.