Research Associate Federal Reserve Bank of Dallas A Primer on the Nature of Business Cycles

for which government spending is available back to 1947. 2 It should be noted that there are several ways to describe the behavior of the trend of an economic aggregate such as GNP. The method here is that employed in Hodrick and Prescott (1980). This method happens to give rise to a variable trend growth rate. An alternative description of the trend would change the definition of the cycles. However, for the most part, the magnitude and correlations of these fluctuations, described later, would be roughly the same even with an alternative definition of the trend. F or a considerable time, economists have devotedmuch effort to obtaining a greater understand-ing of the causes of the business cycle, or (as it used to be called) the trade cycle. Business cycles, in themselves, are thought by many to be undesir-able. Therefore, a greater understanding of th