When academic economists talk about business
cycles, they have something more general in mind
(GDP) about its trend, which is the definition typically
used by business economists. For an academic
economist, the business cycle describes the way that
cyclical fluctuations of GDP typically relate to cyclical
fluctuations of other economic time series (such
as consumption and investment) from the same economy.
One of the most striking findings of the vast academic
business cycle literature is that irrespective of
the time period or particular country, business cycles
are all alike. This means that the typical relationship
between cyclical fluctuations of GDP and cyclical
fluctuations of other economic time series of the U.S.
economy is similar to the typical relationship between
cyclical fluctuations of the same time series in all other
market-based economies. As Lucas (1977) notes,
this finding is both important and challenging for the
study of business cycles, since it suggests the possibility
of a unified explanation of business cycles
based on general laws governing market economies.