<p>You are correct that there have in fact been periods of time when growth was flat, or even negative. For example, if one could observe the economy of the <a href="https://en.wikipedia.org/?title=Cahokia" rel="nofollow">Cahokia</a> over time, one would expect to see a period of negative growth. Further, the rapid growth we're to which we are accustomed is <a href="http://delong.typepad.com/sdj/2013/09/lighting-the-rocket-of-growth-and-lightening-the-toil-of-work-another-outtake-from-my-slouching-towards-utopia-ms.html" rel="nofollow">a very recent phenomenon</a>. </p>

<p>It's impossible to know whether growth will continue at such a pace or slow dramatically; prominent economists such as Robert Gordon <a href="http://www.voxeu.org/article/us-economic-growth-over" rel="nofollow">have argued</a> that future growth may be much slower (though few argue that it will be flat or negative), a set of hypotheses known as "secular stagnation".</p>

<p>So while your textbook, showing cyclical variation around a positive long-term trend, correctly depicts modern business cycles, there's no reason to believe that such a trend must appear in all societies at all times.</p>

CC BY-SA 3.0
2015-06-17T15:05:57.770Z
2015-06-17T15:05:57.770Z
dismalscience
<p>Not really. The long term upwards trend is what we deal with in growth theory. And the reasons that are brought up for that trend typically are inventions/technology, population growth, increases in human capital.</p>

<p>There are reasons to believe that technological growth - an important driver - may stop, and hence long term growth may flatten out. But there's nothing inherent in these drivers of growth that necessarily implies mean reversion (and eventually negative growth). </p>

CC BY-SA 3.0
2015-06-17T23:13:24.360Z
2015-06-17T23:13:24.360Z
FooBar
<p>I was looking through my textbook on Money, Banking, and the Economy and I came to the chart of the hypothetical short-term business cycle deviating around an upward sloping long-term cycle trend. My quarrel with this is does there necessarily have to be an upward sloping long-term trend? </p>

<p>I'm pondering that if we were to look at economies from different times (that are isolated in our analysis) couldn't there exist a possibility that in the more grandiose long-term an economy may exhibit flat, or perhaps negative long-term trends. Perhaps nations that are on the decline may exhibit these traits. Just a random question that I wanted to throw out there.</p>

<macroeconomics><economic-growth><business-cycles>
Hypothetical Long-term Business Cycle
Michael
# Hypothetical Long-term Business Cycle

(Asked by: username_0 on 2015-06-17)

I was looking through my textbook on Money, Banking, and the Economy and I came to the chart of the hypothetical short-term business cycle deviating around an upward sloping long-term cycle trend. My quarrel with this is does there necessarily have to be an upward sloping long-term trend?

I'm pondering that if we were to look at economies from different times (that are isolated in our analysis) couldn't there exist a possibility that in the more grandiose long-term an economy may exhibit flat, or perhaps negative long-term trends. Perhaps nations that are on the decline may exhibit these traits. Just a random question that I wanted to throw out there.

**Tags:** macroeconomics, economic-growth, business-cycles

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## 2 answers

### Answer by username_1 on 2015-06-17. Score: 1

You are correct that there have in fact been periods of time when growth was flat, or even negative. For example, if one could observe the economy of the [Cahokia](https://en.wikipedia.org/?title=Cahokia) over time, one would expect to see a period of negative growth. Further, the rapid growth we're to which we are accustomed is [a very recent phenomenon](http://delong.typepad.com/sdj/2013/09/lighting-the-rocket-of-growth-and-lightening-the-toil-of-work-another-outtake-from-my-slouching-towards-utopia-ms.html).

It's impossible to know whether growth will continue at such a pace or slow dramatically; prominent economists such as Robert Gordon [have argued](http://www.voxeu.org/article/us-economic-growth-over) that future growth may be much slower (though few argue that it will be flat or negative), a set of hypotheses known as "secular stagnation".

So while your textbook, showing cyclical variation around a positive long-term trend, correctly depicts modern business cycles, there's no reason to believe that such a trend must appear in all societies at all times.


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### Answer by username_2 on 2015-06-17. Score: 0

Not really. The long term upwards trend is what we deal with in growth theory. And the reasons that are brought up for that trend typically are inventions/technology, population growth, increases in human capital.

There are reasons to believe that technological growth - an important driver - may stop, and hence long term growth may flatten out. But there's nothing inherent in these drivers of growth that necessarily implies mean reversion (and eventually negative growth).


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