Lessons from the crisis The first lesson is that the business cycle still exists and that financial behaviour matters, sometimes a lot, to how that cycle unfolds. We need to have a broad definition of the term “business cycle” in mind. There is more than just the cycle in the “real” economy of GDP, employment, consumer price inflation and so on.
These remain important, but it is just as important to recognise the cycles in risk-taking behaviour and finance. Failing to do that is precisely what has got some countries into trouble this time.