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The Economic Long Wave: Theory and Evidence

  • John D. Sterman
Conference paper

Abstract

The economic malaise of the 1970s and 1980s has revived interest in the economic long wave or Kondratieff cycle (Kondratieff, 1935, 1984). Numerous theories of the long wave have emerged in the past 10 years, including theories stressing innovation, labor dynamics, resource scarcity, and class struggle [1]. Since 1975 the System Dynamics National Model (NM) has provided an increasingly rich theory of the long wave (Forrester, 1981, 1979, 1977, 1976; Graham and Senge, 1980; Senge, 1982; Sterman, 1985a,b). Though the model focuses primarily on economic forces, the theory emerging from the NM is not monocausal: it relates capital investment; employment, wages, and workforce participation; inflation and interest rates; aggregate demand; monetary and fiscal policy; innovation and productivity; and even political values. The NM is unique among recent theories of the long wave in that it views the long wave as a syndrome consisting of interrelated symptoms and springing from the interactions of many factors. The NM integrates diverse hypotheses about the genesis of the long wave. The NM also provides an analytical framework in which alternative theories can be tested in a rigorous and reproducible manner.

Keywords

Interest Rate Business Cycle Capital Stock Real Wage Real Interest Rate 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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© Springer-Verlag Berlin Heidelberg 1987

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