The Business Cycle is a journal entry in Political & Economic Changes that has the most significant effect on the gameplay loop. The Business Cycle can be disabled or enabled only for players in the Game Rules.

The journal entry is semi-permanent once unlocked, and is disabled only by implementing a Command Economy.

The Business Cycle journal entry seeks to replicate the booms and busts that especially marked 19th century and early 20th century without completely changing the mechanics of the game.

The two most important aspects of the Business Cycle are the two values it tracks: Market Confidence and Market Volatility. These determine if a significant market adjustment occurs in the economy: Stagnation, Depression, Recession, Boom or Gilded Age.

The most significant effect of the Business Cycle journal entry is that throughout the game, Booms and Busts will trigger.

Booms increase Throughput (with a stronger effect on manufacturing and services than resource extraction and agriculture), Construction, Migration, and Investments.

Busts decrease the same, but also decrease Legitimacy, MAPI, Economy of Scale bonuses and Law Enactment time.

The chance of a Market Adjustment, and if it is a Boom or a Bust, is determined by Market Confidence and Volatility (see below).

Recessions, Booms and Gilded Ages are temporary (4 years for Recessions and Booms, 6 years for Gilded Ages). Their effects apply in full for the first half of the period, and will then start reducing in the second half.

Depressions have a variable duration (see below).


Booms and Busts affect ideologies and pop attraction to IGs in different ways.

The most universal is that all IGs in government when a Recession or Depression is triggered have reduced Political Strength and Pop Attraction regardless of their ideology.

The second is that, depending on your economic law, different interest groups will have increased or decreased pop attraction. For example, under Traditionalism, the Landowners have reduced attraction if a Recession or Depression is triggered. Trade Unions have an increased attraction in most Recessions and Depressions, unless you have Cooperative Ownership.

Certain ideologies will be more likely to spawn during Recessions and Depressions. Communists, Vanguardists, Anarchists, Fascists and Ethno-Nationalists all have increased chances during Depressions and Recessions. Some other ideologies have increased chances depending on your laws, such as Social-Democrats with laissez-faire, ideologies who support central banking if you have Free Banking or Merchant Banks, and so on.


Market Volatility determines the activity in your market, for good or ill. A high volatility represents an economy where investments and prices are rapidly fluctuating. Mechanically, it affects the monthly chance of a market adjustment.

The primary factors of Market Volatility is the Banking Law, amount of Construction Sectors and their Production Method (more advanced production methods generating more volatility), size of the Banking Sector (a new building added by the mod), relative industrialization (agrarian buildings reduce volatility, industrial buildings increase it) and GDP growth.

A Market Adjustment (boom or bust) can happen between -20 and +25 (maximum value), but at negative values the chance is very low.

A volatility below -10 triggers a distinct market adjustment, Stagnation (see below).


Market Confidence determines what kind of market adjustment you get when volatility triggers the check. A positive value is good and increases the chance of a Boom or Guilded Age, while a negative value increases the chance of a Recession or Depression.

Market Confidence is increased by having loyalists, high legitimacy, low taxes, having high cash reserves in industrial and service buildings, and having a Market Volatility in the 0-10 range (largest bonus at Volatility 5).

Market Confidence is decreased by having radicals, low legitimacy, high taxes, being heavily in debt (up to 25% of your maximum having no effect), having the Merchant Banks or Traditionalism laws, having low reserves in industrial and service buildings.


The single largest factor for Market Confidence, positive and negative, is to have had a boom or a bust recently. Having had a bust recently gives a temporary bonus to Confidence, while having had a boom recently gives a temporary malus to confidence. This effect is lessened by the new Mixed Economy law, and increased by Laissez-Faire and Free Banking laws. Depressions and Gilded Ages have larger effects than Recessions and Booms.

This means that with uncontrolled Market Volatility, you are very likely to be stuck in a Boom and Bust Cycle, recessions followed by booms followed by recessions, and so on.

If the economy is otherwise healthy and the political system is stable, this might mean shifting between Recessions and Gilded Ages, for a significant net positive effect. However, if the economy is otherwise unhealthy and the political system is unstable, this might mean shifting between Depressions and Booms, for a net negative effect on economic growth.

Don't panic! Having Depression and Recessions is not a fail-state.


Stagnation is a fifth market adjustment that occurs when Volatility reaches -10. It functions like a more limited Bust, in that it decreases construction and investments, but does not decrease Throughput, MAPI or Legitimacy.

Stagnation is removed by getting to a positive Volatility, or by triggering another Market Adjustment.


Positive and negative semi-random events are tied to the Business Cycle Journal Entry, ranging from bank panics to droughts, to philanthropy and bull markets. They will typically affect Volatility and/or Confidence, as well as other effects, for a temporary period.

Having a Central Bank and a high investment level in the attached institution, and/or a more interventionist economic law, enables new responses to negative events. Having Laissez-Faire or Free Banking strengthens or lengthens the duration of positive events.


Adopting Central Banking gives more tools in dealing with the business cycle, dependent on institution level.

Adopting either of the Central Banking laws and having a Central Bank institution of 2 or higher, enables adjusting Interest Rates. Increasing Interest Rates cools down the economy, reducing both Volatility and Confidence. Decreasing Interest Rates heats up the economy, increasing both Volatility and Confidence.

Having Hard Currency Central Banking enables devaluing your currency. This is a one-time significant cash injection, at the cost of a reduction in Market Confidence and Prestige. Currency can be devalued up to five times with escalating effects. Once devalued, the currency can be redenominated at significant cost to remove the penalties.

Having Fiat Currency Central Banking enables adjusting your minting rate. This affects your income from minting and Market Volatility. Lower minting rates decrease Volatility and increase Prestige, while higher minting rates do the opposite. A high minting rate has a risk of triggering a Hyperinflation event with significant negative repercussions.


While Recessions last four years, Depressions have a variable time.

Depressions trigger a new Journal Entry with a progress bar. Every 20 on the progress bar starts to slowly reduce the penalties from the Depression, and once it hits 100, the depressions ends in 6 months.

GDP Growth, Market Confidence and dealing with Events are the main ways the progress bar ticks up and speeds up recovery.

Depressions spread within your market. If you are in a customs union, it is very likely that it will spread, reducing relations and the market confidence of your customs union partners.


After 1900, if an economy with 10+ SoL and 125 million GDP would trigger a Depression, they instead trigger a Great Depression.

The Great Depression has even harsher penalties for the country which triggered it, and slows down recovery from depressions of all countries that are not Isolationist.

Once the Great Depression is triggered, all countries in the world that aren't isolationist and who have the Business Cycle Journal Entry, will get a drastic reduction in Market Confidence and reduced relations with the country that triggered the Great Depression.

The Great Depression as a global event is ended either when the country that triggered it is no longer in a Depression, or it no longer exists.

The penalties of the Great Depression for the non-triggering country can be mitigated and even removed by other countries. The first method of mitigating it is when it triggers: countries with a high enough Central Banking institution has an option of intervening in the economy, reducing the Confidence malus.

The second is by triggering Booms and Gilded Ages. Triggering a Boom during a global Great Depression halves the Market Confidence malus. Triggering a Gilded Age removes it entirely.