Ilse Mintz

English

Research Papers in Economics

This PDF is a selection from an out-of-print volume from the National
Bureau of Economic Research
Volume Title: Dating Postwar Business Cycles: Methods And Their Application
To Western Germany, 1950-67
Volume Author/Editor: Ilse Mintz
Volume Publisher:
Volume URL: http://www.nber.org/books/mint69-1
Publication Date: 1969
Chapter Title: Other Investigators
Chapter Author: Ilse Mintz
Chapter URL: http://www.nber.org/chapters/c2161
Chapter pages in book: (p. 48 - 52)Other investigators findingsonGerman
business cycle turning dates
It is interesting to compare our results to the views of other investigators.
Such views, in most instances, refer to only one particular cycle or cycle
phase. Therefore, they will be quoted cycle by cycle.
First, however, we note findings covering a longer period, the Wharton
Index of Capacity Utilization, 1955-67. This quarterly index is supposed to
"give a good' picture of the business cycles which have occurred since
Actually, the turns in the index agree closely with our turns. In
three instances (1959, 1961 and 1963) our turning month is within the
Wharton turning quarter. In the fourth instance, the Wharton index turns in
the fourth quarter of 1955, while our date is January 1956. (It may be
recalled that the downturn of the step cycle diffusion index came in
December 1955.) A real discrepancy, however, occurs in 1965 when the
Wharton downturn comes in the first quarter and ours only in December.
This downturn was difficult to set because there were double peaks in a
number of indicators. Industrial production -whichis what the Wharton
index reflects -turnedin January 1965 according to deviation cycles, but in
June 1966 according to step cycles. German observers also disagree on this
date as will be seen below. However, they select dates between mid-1965 and
mid-i 966 rather than the earlier date of the Wharton index.
In the absence of other quarterly or monthly chronologies our dates
may be compared to those implied in comments on the state of the German
economy. The following is a tiny sample of innumerable remarks of this kind.
It is meant to convey their flavor and to show where observers agree or
disagree with our dating.
That three cycles in German business activity have occurred since 1954
is widely accepted. In terms of years, upturns seem to be placed most often in
1954, 1959 and 1963-64; downturns are thought to have taken place in
1955-56, 1961 and 1965 or 1966. All of our turns occur within these years.
Where they are paired, as in 195 5-56 and 1965-66, the step cycle turns in one
year and the deviation cycle in the other. The exception is 1964 where we
find no evidence indicating that the slowdown extended into this year.
32Wharton School of Finance and Commerce, Wharton Economic Newsletter,
University of Pennsylvania, Spring 1968, pp. 11 and 15.
48Other Investigators' Findings
In some instances analysts have designated a half-year or even a quarter
as a turning date. Understandably, opinions regarding such more specific
dates tend to differ among experts.. Monthly dates are not discussed as far as I
know.33
1. The Business Cycle: January 1954-February 1956-March 1959
a) Speed up in 1954-55
"Last year [1954] West Germany basked in the sunshine of interna-
tional prosperity. It was able to increase its GNP growth rate significantly (by
almost 25 per cent) compared to the preceding
b) Slowdown in 1956-58
"Output in Germany has been growing more slowly since 1955
The investment goods sector experienced a noticeable slackening of home
demand in the second half of 1
"Output and incomes of the West German economy experienced
continuous decline of growth rates since the boom year 1955 [through
1958] "36
"Nodoubt, therefore, the present [1958] sluggishness of the produc-
tion index is also due to the slackening tendencies which, as has been
repeatedly shown in these columns, have for some time been apparent in a
part of the economy."37
33Because of the tentative nature of the 1951 downturn, the following references
do not cover the contraction 1951-54.
34"Westdeutschland stand im vergangenen Jahr auf der Sonnenseite der interna-
tionalen Konjunktur. Es konnte seine Fortschrittsrate in der Sozialproduktsentwicklung
gegenueber dem Vorjahrsfortschritt ...betraeehtlich,urn fast emViertel. ..steigern
."DeutschesInstitut fuer Wirtschaftsforschung, Vierteljahrshefte zur Wirtschafts-
forschung,Berlin,1955, Erstes Heft, p. 14.
for European Economic Cooperation Bulletin, Economic Condi-
tions in the Federal Republic of Germany, Paris, 1957, pp. 9 and 15.
36"Waehrend die Gueter- und Einkommensseite der westdeutschen Wirtschaft seit
dem Boom-Jahr 1955ihrenZuwachs stetig verringerte, ..." DeutschesInstitut fuer
Wi.rtschaftsforschung, Viertelfahrshefte zur Wirtschaftsforschung, Berlin, 1959, Erstes
Heft, p. 14.
37Deutsche Bundesbank,Monthly Report, June 1958,p. 23.
49Other Investigators' Findings
2. The Business Cycle: March 1959-January 1961-February 1963
a) Speedup in 1959-60
"The new upswing of economic activity began in the third quarter of
1958, at first stimulated mainly by an increase in construction and rising
foreign demand, but more recently by restocking throughout industry and
trade and by increased government expenditure."38
The lead of the OECD's upturn relative to ours does not signify a real
contradiction. The OECD refers to leading activities which, in our ter-
minology, precede an upturn.
"An important feature of the situation was that the culmination of the
basic surplus in late 1960, coincided with a pronounced investment boom,
which had already lasted a year and a half, and rapidly rising private and
public consumption. The labour market was tight and the degree of
utiisation of industry capacity very high. The rise of prices and wages had
steepened in the second half of 1960 and the growth of productivity had
slowed down. ... Underthese conditions revaluation of the DM appeared to
be the most appropriate remedy. The DM was revalued by 5 per cent in early
March
"Economic trends in the Federal Republic during 1960, and in the
[three] months of 1961 so far surveyable, were marked by a continuing
upswing. With the continuance of business activity at the highest level."40
b)Slowdown in 1962-63
"The weakening of the expansionary forces which prevailed from 1959
to 1961 has caused problems .... Theretardation in the West German GNP
shows up very clearly. In a significantly weakened state of the economy
which shows a tendency for further weakening.
"The features of the economic situation in the Federal Republic during
1961 and the first months of 1962 continued to be full employment, a
38OECD, The FederaiRepublic of Germany, Paris, 1960, p. 6.
39OECD,Economic Surveys, Germany, Paris, December 1964.
40Deutsche Bundesbank, Report for the Year 1960, p. 9.
41"DieVerringerungder1959bis1961wirksamenkonjunkturellen
Aufschwungskraefte hat.. .Probtemeaufgeworfen ... DieVerlangsamung im Wachstum
des westdeutschen Bruttosozialprodukts ist. .. sehrdeutlich zum Ausdruck gekommen.
In einer merklich abgeschwaechten und sich eher weiter abschwaechenden Konjunk-
turlage.. ." DeutschesInstitut fuer Wirtschaftsforschung, Vierte!jahrshefte zur Wirt-
Berlin, 1963, Erstes Heft, pp. 16, 17.
50Other Investigators' Findings
notable rise in production (although at a slower rate than in 1960) and an
upward price trend. Nevertheless the course of the business cycle in that
period differed in many respects from that in
"The main factor in the slower expansion of overall demand in 1962
was investment."43
3. The Business Cycle. February 1963-December 1965-June 1967
a) Speedup in 1963-64-65
"Economic activity expanded substantially faster in the second half of
1963 than in the first half. ... Theacceleration of economic growth since
autumn 1963 .
.
Ourevidence regarding the February 1963 upturn is very strong. Yet,
the OECD places the date into the third quarter of 1963. This discrepancy
may be due to the exceptionally rigorous winter of 1963. Our procedures
which eliminate extreme values may correct more for the effects of the
weather than the OECD's.
"The year 1964 brought an acceleration of the cyclical expansion in the
West German economy."45
"In the spring of 1964. .. theeconomy of the Federal Republic was in
the phase of an accelerating export-induced expansion."
"Measured by the rate of capacity utilization the upper turning point
was reached in the first half of
b) Slowdown 1966-67
The date of the latest downturn is still controversial. Some would place
it as early as about mid-1965, others decide for 1966. The ambiguity of the
42Deutsche Bundesbank, Report for the Year 1961, p. 46.
43OECD, Economic Surveys,Germany,Paris, January 1963,p.22.
44OECD,Economic Surveys, Germany,Paris, January 1964, p.13; and
December 1964, p. 21.
Jahr 1964 hat der westdeutsehen Wirtschaft eine Beschleunigung der
Konjunkturellen Expansion gebracht." IFO, Wirtschaftskonjunktur, December 1964, p. 2.
46"Im Fruehjahr 1964...befandsich die Wirtschaft der Bundesrepublik in der
Beschleunigungphase eines export-induzierten Aufschwungs."
"Die Konjunktur erreichte ihren oberen Wendepunkt—gemessen als hoechste Kapa-
zitaetsauslastung—im ersten Haibjahr 1965." Sachverstaendigenra.t zur Begutachtung der
gesamtwirtschaftlichen Entwicklung, Stabilitaet im Wachstum, Stuttgart und Mainz,
1967/68, pp. 116, 117.
51Other Investigators 'Findings
evidence is also reflected in our analysis where deviation cycles give December
1965 and step cycles March 1966 as the downturn.
An early turn was selected, for instance, by the IFO Institut. "The
tapering-off period of the growth cycle which had reached its peak in 1965
continues. Like the preceding acceleration, the retardation of growth is
weaker than in
Similarly the OECD: "As the year [1965] wore on, some slackening
appeared in the rate of growth of all main types of expenditure, except
building. .. .Expansionof demand had begun to slow somewhat in the course
of 1965. The first half of 1966 saw little further deceleration and the
weakening became marked in the second half."48
The German Economic Institute favors the later date: "This' argues
against dating the downturn in 1965 and for selecting the center part of the
likely turning period, i.e., the beginning of the year
The difficulty of classifying the first quarter of 1966 is reflected in this
description by the Federal Minister for Economic Affairs: "The prosperity in
the Federal Republic was very uneven during the first quarter of 1966, with a
slight preponderance of tendencies towards cooling off."5°
Finally, regarding the end of the slowdown: "In the summer of 1967 it
became obvious that domestic demand, at least so far as it came from
enterprises, was beginning to rise on a broad basis. In June for the first time a
nonseasonal growth of orders from the home market was recorded by all
industries, not only those producing capital goods, where the reversal had
already begun earlier, but also the basic and consumer goods industries. The
new upswing continued, although with slight fluctuations, until the. first
months of 1968 surveyable as this Report goes to press."5'
47"Die Auslaufperiode des Wachstumszyklus, der im ersten Halbjahr 1965 semen
Hoehepunkt erreicht hatte, haelt an. Wie die vorangegangene Beschleunigung, so ist auch
die Verlangsamung des Wachstums nicht so stark ausgepraegt wie im Zyklus 1959-63."
IFO Institut fuer Wirtschaftsforschung Muenchen, Wirtschaftskonjunktur, April 1966, p.7.
48OECD, Economic Surveys, Germany December 1965,p.6, and March 1967, p.S.
49"Dies sprlcht dafuer, die Markierung des Wendepunktes nicht.in das Jahr 1965
zu setzen, sondern in den mittleren Teil der fraglichen Strecke, also an den Jahresanfang
1966." Deutsches Institut fuer Wirtschaftsforschung, Vierteljahrshefte zur Wirtschafts-
forschung, Berlin, 1966, Drittes Heft, p. 255.
50"Die Konjunktur in der Bundesrepublik war im ersten Quartal 1966 bei einem
leichten Ueberwiegen der Entspannungstendenzen stark differenziert." Der Bundes-
minister fuer Wirtschaft, Die Wirtschaftliche Lage, Erstes Vierteljahr 1966, p. 1.
51Deutsche Bundesbank, Report for the Year 1967, P. 10.
52

Dating Postwar Business Cycles: Methods And Their Application To Western Germany, 1950-67

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