Procykliska

Procykliska, or procyclicality, is a term used in economics and finance to describe phenomena, behaviors, or policies that move in the same direction as the overall business cycle. When a variable tends to rise during economic upswings and fall during downturns, it is considered procyclical. The concept helps explain why some fluctuations in economic activity are amplified rather than dampened. The word is formed from Greek roots meaning “forward” and “cycle,” and is used in many languages, including Czech, to discuss cyclical dynamics in markets, government policy, and financial systems.

In practice, many economic indicators can be procyclical. Tax revenues, output, employment, and consumer spending often grow in booms and contract in recessions. In financial markets, private-sector credit, lending standards, and asset prices can exhibit procyclicality, expanding during good times and tightening or collapsing when conditions worsen. Procyclicality can amplify economic volatility by reinforcing the direction of the cycle, increasing the severity of contractions and booms.

Policy implications center on mitigating procyclicality to promote stability. Countercyclical measures, such as automatic stabilizers in fiscal policy, countercyclical capital buffers, and macroprudential regulation, aim to dampen the cycle rather than amplify it. Understanding procyclicality helps policymakers design tools that lessen systemic risk and reduce volatility in output and employment.

See also: countercyclicality, business cycle, macroprudential policy, automatic stabilizers, financial stability.