Abstract
The BDI may prove increasingly useful for the analysis of business cycles. How does it account for the brevity of the subsequent phases of the business cycle and allows us to forecast future crises? This is done through incorporating the measurement of public expectations and social assessments of the current situation into the BDI. The economy is not so much marked by transitions from one phase of the cycle to another, but by the functional balance disruptions. The system is characterized by a high degree of inertia that can be shaken off by social aspirations and political games. Their effects, both positive and negative, appear with a considerable delay, oftentimes long after the departure of politicians whose decisions have shaped the system balance.
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Koźmiński, A.K., Noga, A., Piotrowska, K., Zagórski, K. (2020). BDI: The New Kid in the Toolbox of Political Economy. In: The Balanced Development Index for Europe’s OECD Countries, 1999–2017. SpringerBriefs in Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-39240-6_5
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