In Western civilization, the periodic deviations from long-run trends in real economic activity, which we have come to know as business cycles, can be identified at least as far back as the sixteenth century. The causes and consequences of these cycles have changed over time, and cycles before 1700 may have differed in effect, frequency, and possibly magnitude from those after 1870; however, the most salient difference was in their causes. The literature on the early cycles tends to associate them with technological change, demographic shocks, specie flows, disruptions in trade, agricultural crises (typically associated with climatic shocks), and/or war. In contrast, by the last decades of the nineteenth century the disruptions in financial markets and the manufacturing sector are usually the suspects in swings in economic activity, though modern business cycle theory still links technological change with cyclical activity.

Scholarly study of the business cycle dates at least from Adam Smith, who discussed the causes of cycles by contrasting the fluctuations in the textile and corn markets, as well as the potential role of monetary shocks via specie flows (1966[1776], pp. 66–75, and pp. 35–55, respectively). By the late nineteenth and early twentieth centuries it had become common in scholarly circles to emphasize the length and supposed regularity of various economic cycles. Thus Joseph Schumpeter (1939, pp. 162–65) could organize cyclical behavior into five broad categories. Seasonal cycles, driven as they were by the rhythms of the agricultural sector, typically ran their course in a calendar year.