Stability through cycles

Abstract

Economic variables like GDP growth, employment, interest rates and consumption show signs of cyclical behavior. Many variables display multiple cycles, with lengths ranging in between 5 to even up to 100 years. We argue that multiple cycles can be associated with long-run stability of the economic system, provided that the cycle lengths are such that interference is rare or absent. For a large sample of important variables, including key variables for the US, UK and the Netherlands, we document that this is indeed the case.

Economic Cycles, Crises, and the Global Periphery

“…And yet, to be honest, these advances in the direction of confi rming the long cycle hypotheses nowadays face up to a formidable and technically often very advanced phalanx of competing studies, which question the very existence of longer cycles in international economics and politics altogether, or at least restrict the relevance of K-cycles to the movements of prices, and not the movements of the "real economy"; thus partially or completely falsifying a core concept of the entire world-system approach (Berry, Kim, & Baker, 2001 ;de Groot & Franses, 2008 ;Diebolt, 2012 ;Diebolt & Doliger, 2006 ;Diebolt & Escudier, 2002 ;Garvy, 1943 ;Haustein & Neuwirth, 1982 ;Kuznets, 1940Kuznets, , 1966Metz, 2011 ;Van Ewijk, 1982 ).…”

“…Some essays, using advanced econometric methods, standing out in the literature have been written by Diebolt ( 2012 ), Diebolt and Doliger ( 2006 ), Diebolt and Escudier ( 2002 ), Silverberg ( 2006 ), and van Ewijk ( 1982 )-thus echoing the early criticism against the long 40-60 year Kondratieff cycle, in Garvy ( 1943 ) and Kuznets ( 1940 ). Even authors from the econometric research tradition, originally sympathetic to the general notion of Kondratieff cycles, deny the existence of such fl uctuations in the real economy, and rather talk about long swings of priceslike Berry, Kim, and Baker ( 2001 ), de Groot and Franses ( 2008 ), Haustein and Neuwirth ( 1982 ), and Van Ewijk ( 1982 )-and hence prefer to talk about price cycles and not cycles of the real economy. The essay by Haustein and Neuwirth ( 1982 ) is particularly interesting and also-in a way-is typical for the econometric mainstream results on the issue: spectral analysis was applied to long-time series of industrial production, energy consumption, inventions, innovations, and patents in order to reveal quantitative regularities in their behavior and/or in their interdependence.…”

“…In the UK, the situation is similar, and also in the Netherlands. A Kondratieff cycle-their essay suggests-is rather a cycle of employment, interest rates, and perhaps wages, but certainly not an economic growth cycle per se (de Groot & Franses, 2008 (Metz, 2011 , p. 235) In view of the often bitter controversies surrounding the idea of longer 40-60 year cycles, we have decided to re-assess the entire evidence, as far as it is possible, today, as the neat North American English saying goes, " from scratch " , and using a plurality of different methods. As is well-known, the initiator of modern historical real purchasing power per capita statistics, Professor Angus Maddison, never believed himself even for a second in the existence of Kondratieff cycles (Devezas, 2012 ;Maddison, 2007 ).…”

The Hallmarks of Crisis: A New Center-Periphery Perspective on Long Cycles

“…The mentioned essays, using advanced econometric methods, at least should name the publications by Diebolt, 2012;Diebolt and Doliger, 2006;Diebolt and Escudier, 2002;Silverberg, 2006;and van Ewijk, 1982; thus echoing the early criticism against the long 40-60 year "Kondratiev/Kondratieff cycle", already voiced by Garvey, 1943;and Kuznets, 1940. Even authors from the econometric research tradition, originally sympathetic to the general notion of Kondratiev/Kondratieff cycles, deny the existence of such fluctuations in the real economy, and rather talk about long swings of prices, like Berry, Kim and Baker, 2001;de Groot and Franses, 2008;Haustein and Neuwirth, 1982;and Van Ewijk, 1982; and prefer to talk about price cycles and not cycles of the real economy. The essay by Haustein and Neuwirth, 1982, is particularly interesting and also -in a way -is typical for the econometric mainstream results on the issue: spectral analysis was applied to long-time series of industrial production, energy consumption, inventions, innovations, and patents in order to reveal quantitative regularities in their behavior and/or in their interdependence.…”

“…In the UK, the situation is similar, and also in the Netherlands. A Kondratiev/Kondratieff cycle -their essay suggests -is rather a cycle of employment, interest rates, and perhaps wages, but certainly not an economic growth cycle per se (de Groot and Franses, 2008 (Metz, 2011: 235) In view of the often bitter controversies surrounding the idea of longer 40-60 year cycles, we have decided to re-assess the entire evidence, as far as it is possible, today, as the neat North American English saying goes, "from scratch", and using a plurality of different methods. As it is well-known, the initiator of modern historical real purchasing power per capita statistics, Professor Angus Maddison, never believed himself even for a second in the existence of Kondratiev/Kondratieff cycles (Maddison, 2007;Devezas, 2012).…”