7 junio, 2024

Conjunctural change: what it is, characteristics, examples

What is a temporary change?

He conjunctural change it refers to an alteration to the current social or economic system that will not produce effects on the bases on which it is sustained. In any case, it seeks to preserve these bases so that there is no major repercussion on the State.

Therefore, the conjunctural change does not modify either the judgments or the laws, but rather its greatest emphasis is only on a segment of the population that presents certain rulings. It is generated when the political and social forces that have fostered this change have the capacity to assert the opportunity presented.

Commonly, this change is used to vary only one or several aspects that are very small, but that have great importance for the future of the country. They are only implemented if everyone involved agrees to make certain changes.

In this sense, not all structural difficulties require this pressing change. Therefore, it is necessary to maintain a deep analysis of the elements that affect the country and that are unnecessary.

Characteristics of the conjunctural change

– It happens spontaneously or momentarily. It turns out to be a short-term change.

– It can refer to natural problems, such as storms, catastrophes, earthquakes and others.

– It also focuses on the various social components.

– Concentrates on a single problem to find the fastest solution.

– It is of less magnitude and duration than the structural change.

– Seeks that the elements that make up the bases of a State are maintained. In other words, once the problem is solved, the country once again has the same policies with which it works naturally.

short-term policy

It is when the economic policies of a country are modified with the purpose of being able to correct an existing imbalance in the economy or overcome an emergency created by man or natural, whose permanence has a certain time limit when its execution begins.

These policies seek to regulate the economy in the short term in order to equalize the income of the gross domestic product (GDP) at its viable level, avoiding a bad economic cycle. For this reason, they are also called stabilizing policies, since they serve to prevent differences between viable and effective GDP.

Conjunctural policy objectives

Conjunctural policies have different objectives.

Full employment, where there is no involuntary unemployment.
Price stability, with inflation around 2% or 3% in the medium term.
An external balance, in which there is no foreign debt that is greater than the future payment capacity.

In order to achieve these objectives, various tools can be used, such as:

Monetary policy, either through the administration of the interest rate or other variables.
Exchange rate policy, with a flexible or fixed exchange rate regime, in addition to changes in the value of the national currency against other currencies.
Fiscal policy, through the modification of public income and expenditure.
Earnings policy, which seeks to influence the rate of increase in benefits, generally wages, thus contributing to job creation or price stability.

Examples of conjunctural changes

The conjunctural change is the change in the economy that is not common, but occurs due to some special case, such as:

– When the new habits of society are taken in order to open a new market.

– When the socialist market introduces capitalist parameters.

– The change of position of a worker to an area that is not his specialty.

– When the fast food industry takes advantage of new eating habits.

– Lowering or raising of the prices of existing goods in the market.

– The entry into the society of electric cars/automobiles.

– China transforming from a fully centralized economy to a market economy.

– Increases and decreases in tax revenue.

– The increase in the price of oil, which temporarily increases either the production of this resource or the debt of a country. This causes the country that exports it to have a doubling of the demand by the country that imports it.

Other examples

unstable economies

The conjunctural changes, when occurring in the short term, bring punctual variations. For example, when an economy is unstable and undergoing constant changes, the value of the currency adapts precisely to its state.

Seen in the long term, it is valid to consider inflation as a structural change; however, it generates changes in the currency that are considered temporary changes.

This reflects the fact that conjunctural changes can occur based on structural ones. However, this is not always the norm.

job changes

In a society, when a person leaves their job position suddenly, many times the loss of personnel is replaced by using a person who works for the same company, but who is not necessarily a specialist in the area to which they are assigned.

This change cannot be sustained in the long term as it would harm the company as a whole, but temporarily, in the short term it is possible to do so.

Oil price increase

An example of a conjunctural change is the increase in the price of oil. This increase benefits oil-exporting countries and harms those that import it for a certain period of time.

Increase in public spending

Another example of temporary change is when public spending is increased to create employment and improve the purchasing power of the domestic market.

Although this measure cannot be sustained in the long term because the country begins to borrow if its spending exceeds its income, it is usually a widely used economic correction and reactivation policy.

Russian Revolution

If you want to understand the process of the Russian Revolution carried out in 1917, you have to refer to the conjunctural change: the nation was being governed by a tsarist system that denied rights to most of the people.

In addition, at that time the First World War was taking place, due to which the Russian army suffered heavy defeats. All this situation made it possible for a revolutionary movement to emerge and grow that finally managed to seize power to modify the social organization of the country.

Differences between conjunctural change and structural change

Unlike structural causes, conjunctural changes are transitory, disappearing in a short term, such as the rainy season or electoral uncertainty. The structural changes to be solved require deep surgery or a prolonged effort.

Duration, reversibility and scope of change

The conjunctural change is caused in a timely manner due to an exceptional event. This change is generally reversible, disappearing when that event disappears. Likewise, it will be something like a «repair», because it will not disturb the structure as a whole.

On the other hand, structural change is when the entire structure is changed, either due to a new circumstance or because deficits that must be resolved are being dragged along. Usually it is an irreversible change, which affects the entire structure as a whole.

Need

The modification of the structural component of an economy cannot be carried out in the short term. This means that it is necessary to modify not only the policies, but the entire economic system of a nation. The productive structure of the country must be urgently changed so as not to hinder its development.

The necessity of this change means that the foundations of certain economic habits are not suitable for the needs, expenses and budget of the country.

On the other hand, the need for a conjunctural change means that the economic habits and structure of the country can be maintained, but that there is an obvious opportunity to modify them to optimize their benefit.

References

Situational and Structural. Taken from: eumed.net.
conjunctural. Taken from: legalguias.wolterskluwer.es.
Difference between conjunctural and structural change. Taken from: brainly.lat.

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