Discussion of the indicators used in developing an early and accurate judgemental prediction of weak recovery or depression
A theory is developed which asserts that energy-price-induced innovation causes depression and recessions. Recessions result from promptly adopted successful innovation, which caused declining demand for the products replaced by the successful innovation. A series of partially successful costly innovations occurs during the years of collapse into a depression. Consumers withdraw from the market because of the cost and uncertainty resulting from the innovation process. This theory is compared to and logically related to those of Schumpeter, Keynes, Mench, Freeman, and Marchetti. The theory is tested for the transportation sector of the economy, the most energy intensive economic sector. It is shown that vehicle innovation starts just before major US depressions and extends through each depression. The cycles of vehicle innovation are linked to collapses in vehicle output and to declines in GNP. Three depressions are studied in detail. These are the Debt Repudiation Depression of 1839 to 1843, the Depression of the Nineties, and the Great Depression. Characteristics of these depressions are contrasted with recessions since 1890 and with current US conditions. Proper actions by the US auto industry, e.g., introduction of new low priced models, will not occur during this year. A fuel tax whose revenues would be used to promote the sales of new, fuel efficient domestic automobiles is suggested for consideration as a means of assuring a recovery rather than a depression. In April of 1983 an increase of gasoline taxes, differential sales incentives increases on fuel efficient cars, and government payments to individual consumers (tax refunds) all combined to lead to increases in auto sales, record stock price levels and general optimism about economic recovery.
- Research Organization:
- Argonne National Lab., IL (USA)
- DOE Contract Number:
- W-31-109-ENG-38
- OSTI ID:
- 5952103
- Report Number(s):
- CONF-830682-3; ON: DE83015379
- Resource Relation:
- Conference: 3. international symposium on forecasting, Philadelphia, PA, USA, 5 Jun 1983; Other Information: Portions are illegible in microfiche products
- Country of Publication:
- United States
- Language:
- English
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