Business Cycles: The Problem and Its Setting

Wesley Clair Mitchell

Jan 1927 · National Bureau of Economic Research

About the author

Wesley Clair Mitchell was an American economist. Born in Illinois, he studied at the University of Chicago under Thorstein Veblen and taught at Columbia University. As Veblen's student he developed an "institutional" view of the economy based on his belief that financial factors, especially corporate profits, are the driving force in industry. Director of the National Bureau of Economic Research (NBER) for 25 years, he devoted his life to the study of business cycles. Mitchell is regarded by many as the greatest of the business-cycle analysts. His first major work, Business Cycles (1913), identified various economic processes at work during periods of economic expansion and contraction, and suggested techniques for identifying leads, lags, and turning points. This work, along with Measuring Business Cycles (1946), which he coauthored with Arthur Burns, set the standard for determining business-cycle turning points in U.S. economic history. Most of the business-cycle indicator terminology used today is a direct result of Mitchell's work. Mitchell's last work, What Happens During Business Cycles: A Progress Report (1951), was an early but incomplete effort to construct a dynamic, self-generating theory of business cycles. Marshall's legacy to the profession was enormous. Such is the reputation of the NBER's work on business cycles that even the U.S. Department of Commerce defers to it for the dating of cycle turning points.