Kuznets Cycle Research Articles

Increasing returns and business cycles in a family of Goodwinian models with Leontiev technology

The main purpose of this paper is to build a family of tutorial Goodwinian (essentially Marxist) models of capital accumulation through industrial cycles that are less complicated than the author’s models of the extended capitalist reproduction in the USA already published. The subordinate purpose is to advance refinement of these models from the standard “neoclassical” assumptions that distort the generic structures determining perpetual disequilibrium in the reproduction of the aggregate social capital. The ascending from abstract to concrete applies the notion of twofold nature of capitalist production as creation of use value and labour value (prioritizing surplus value). This approach reveals substantial facets of endogenous increasing returns and technological progress induced by capitalist production relations. A three-dimensional Goodwinian model L-1, containing the greed feedback loops, reflects destabilizing cooperation and stabilizing competition of investors. Monopoly capital implements proportional and derivative control over the capital accumulation rate. The growth rate of output per worker directly depends on the growth rates of capital intensity and employment ratio in a technical progress function, whereas the capital-output ratio is constant. Oscillations imitating growth cycles are endogenous. A recession (mild crisis) is a manifestation of relative and absolute over-accumulation of capital. A knife-edge limit cycle maintains a growth cycle with the Kondratiev duration; a more solid limit cycle with a period of about 7.5 years upholds a business cycle with a recession without reduced net output. These limit cycles result from the subsequent supercritical Andronov–Hopf bifurcations. The transformation of the growth cycle into industrial cycle gives credit to raising status of capital-output ratio from auxiliary in L-1 to the level (phase) variable in four-dimensional L-2. A mechanization (automation) function mirrors induced technical progress. L-2 embraces new 11 intensive feedback loops involving capital-output ratio. Proportional and derivative control over this ratio by monopoly capital is taken into account. Pair of supercritical Andronov–Hopf bifurcations gives birth to two limit cycles. The second is a remote analogue for Kuznets cycle with the period of about 18 years; the first upholds the industrial cycle with period of about 7 years and declining net output in the outright crisis. Besides relative and absolute over-accumulation of capital, the specific positive and negative feedback loops containing capital-output ratio are required for crises in industrial cycles. Long-term enhancement of monopoly profit through lowering a targeted domestic capital accumulation rate and diminishing a targeted output-capital ratio is substantiated analytically and validated by computer simulations. The gained insights highlight caveats for hastily policy recommendations.

Study on temporal and spatial differentiation of biocapacity in Shenyang from a multi-scale perspective.

Biocapacity of a region exhibits spatial differences owing to the limitations of regional scale and natural conditions. Based on the multi-scale perspective, we comprehensively studied and analyzed the temporal and spatial differences of the biocapacity of a region in an attempt to establish the groundwork for optimizing urban development and its utilization framework. By adopting the ecological footprint model along with multi-scale difference evaluation method, the municipal and county scales are incorporated into a unified analysis framework in this paper, thereby facilitating the exploration of the temporal and spatial differences in the biocapacity of Shenyang—a city in China—from 2005 to 2019. The results demonstrated that: 1) At the municipal scale, the biocapacity per capita fluctuated between 1.35 hm2/person and 2.22 hm2/person. It revealed an “up-down-up” trend, which appeared consistent with the Kuznets cycle; at the county scale, the biocapacity depicted spatial differences, while those of downtown and surrounding districts/counties developed a two-level ascending hierarchical structure. 2) The time series of footprint size and depth first ascended and then declined, and can be classified into four types: closed type, inverted U-type, S-type, and M-type. Among them, S-type and M-type have the phenomenon of over-utilizing the stock capital. 3) For a long time, the regional difference of biocapacity has mostly dwelt on two scales with an evident scale effect, and the biocapacity of Liaozhong District was the worst.

ECONOMIC VIEWS OF S. KUZNETS AND THE RECEPTION OF THE THEORY OF MEDIUM-TERM CYCLES IN THE POLITICAL ECONOMY NARRATIVE

On the example of four micro-plots, the key theses of the economic views of the Nobel laureate S. Kuznets have been revealed. The main papers of Kuznets and his supervisor – W. K. Mitchell have been analysed, the reception of methods used by S. Kuznets in the prospect of economic theory has been traced. The reception of the mechanics of S. Kuznets’ research in modern political economy theory, referring to the research of D. Acemoglu and J. Robinson has been considered. In Appendix to this paper, a brief analysis of the political interpretation of the S. Kuznets cycle theory, proposed by D. Acemoglu and J. Robinson has presented. The research presented in the article summarizes the experience of research on economic views of S. Kuznets and emphasizes the prospect of using the author’s experiential optics.

Многомодельная Оценка Инновационного Развития 78 Российских Регионов По Опережающим Индикаторам За Период 2005–2017гг. (Multimodel Estimation for Innovative Development of 78 Russian Regions Using Leading Indicators During 2005-2017)

Russian Abstract: Предложен комплекс опережающих индикаторов инновационной динамики России и их многокомпонентные оценки для 78 регионов за период 2005-2017 годов. Индикаторы характеризуют динамику основных отраслей российской экономики (строительства, торговли, добычи полезных ископаемых, обрабатывающей промышленности) трендами, циклическими, сезонными колебаниями и их взаимодействиями. Динамика продукции сельского хозяйства, в большей степени обусловленная климатическими и природными условиями, пока не рассматривались. Для трендов индикаторов предложены одна линейная и шесть существенно нелинейных (нелинейных по параметрам) моделей. Сезонная компонента моделировалась гармоникой с сезонными коэффициентами, а циклы Китчина, Жугляра и Кузнеца - суммой гармоник с некратными частотами (по Е.Е. Слуцкому). Взаимодействие компонент рассматривалось как линейное (аддитивной), так и нелинейное (аддитивно-мультипликативное). Скорректированный коэффициент детерминации обосновал более точные модели. Было уделено внимание расширению адаптации инструментария, прогнозированию всех регулярных компонент индикаторов, характеристикам инновационного развития и синхронности циклов отдельных регионов. Представлен новый и большей точности материал для руководителей, служб и предприятий регионов, определены дальнейшие перспективы развития предложенного инструментария. English Abstract: The authors proposed a set of leading indicators of innovation dynamics in Russia and their multicomponent estimates for 78 regions during 2005-2017. The indicators show dynamics of the most important economic sectors in Russia (building, trade, mining, manufacturing and its branches) while agricultural production, which dynamics mostly depends on climate and geography, have not yet been considered The models include trends, cycles, seasonal component and their interactions. For trends one linear and six substantially nonlinear (nonlinear in the parameters) models are used. The seasonal component was modeled by seasonal coefficients. Kitchin, Juglar and Kuznets cycles was modeled using sum of three sine curves with non-proportional frequencies (as suggested by E.Slutsky). The interaction of components was considered both linear (additive) and nonlinear (additive-multiplicative). The most accurate models were justified using adjusted coefficient of determination. Special attention is paid to adaptive modeling tools expansion, leading indicators decomposition and forecasting, innovative development analysis and regional cycles synchrony or asynchrony. As a result of the modeling the authors presented new and more accurate material for regional authorities and managers. Further development of the proposed modeling tools are also suggested.

Analysis of the Situation of Real Estate Industry in China and the United States Based on Behavioral Economics

In recent a few years, the rapid development of Chinese real estate industry brought a wave of unprecedented prosperity to the Chinese economy, making it jump fast to the second highest in the world in a short time. In our opinion, although this economic cycle seems to be a Kuznets cycle, it is still different from the classical theory put forward by Simon Kuznets when we use the theory of behavioral economics to analyze. The purpose of this article is to analyze the causes and effects of this economic peak from the perspective of macroeconomic management by using the theory and method of behavioral economics.1

Nonlinear Differential Equation of Macroeconomic Dynamics for Long-Term Forecasting of Economic Development

In this article we derive a general differential equation that describes long-term economic growth in terms of cyclical and trend components. Equation is based on the model of non-linear accelerator of induced investment. A scheme is proposed for obtaining approximate solutions of nonlinear differential equation by splitting solution into the rapidly oscillating business cycles and slowly varying trend using Krylov-Bogoliubov-Mitropolsky averaging. Simplest modes of the economic system are described. Characteristics of the bifurcation point are found and bifurcation phenomenon is interpreted as loss of stability making the economic system available to structural change and accepting innovations. System being in a nonequilibrium state has a dynamics with self-sustained undamped oscillations. The model is verified with economic development of the US during the fifth Kondratieff cycle (1982-2010). Model adequately describes real process of economic growth in both quantitative and qualitative aspects. It is one of major results that the model gives a rough estimation of critical points of system stability loss and falling into a crisis recession. The model is used to forecast the macroeconomic dynamics of the US during the sixth Kondratieff cycle (2018-2050). For this forecast we use fixed production capital functional dependence on a long-term Kondratieff cycle and medium-term Juglar and Kuznets cycles. More accurate estimations of the time of crisis and recession are based on the model of accelerating log-periodic oscillations. The explosive growth of the prices of highly liquid commodities such as gold and oil is taken as real predictors of the global financial crisis. The second wave of crisis is expected to come in June 2011.

Governmentally amplified output volatility

Abstract Predominant government behavior is decomposed by frequency into several periodic components: updating cycles of infrastructure, Kuznets cycles, fiscal policy over business cycles, and election cycles. Little is known, however, about the theoretical impact of such cyclical behavior in public finance on output fluctuations. Based on a standard neoclassical growth model, this study intends to examine the frequency at which public investment cycles are relevant to output fluctuations. We find an inverted U-shaped relationship between output volatility and length of cycle in public investment. This implies that periodic behavior in public investment at a certain frequency range can cause aggravated output resonance. Moreover, we present an empirical analysis to test the theoretical implication, using the U.S. data in the period from 1968 to 2015. The empirical results suggest that such resonance phenomena change from low to high frequency.

Kerala and Tamil Nadu: Differing Pathways to Development

Kerala and Tamil Nadu, neighbouring states in South India, have each in its own way attracted much attention from development economists in India and abroad. Kerala is known for its development record illustrated by the high levels of literacy of its citizens and health related development indictors. Kerala’s record of development has generated debate on the primacy of growth as opposed to investments in health and education as propagators of development. Kerala is supposed to have achieved development with little growth. The other striking feature of Kerala’s economy is the relatively low contribution of manufacturing to its growth and the preponderance of the services sector in both growth and employment. Tamil Nadu, in contrast to Kerala, possesses a manufacturing sector led by high tech automobiles and low tech textiles sectors amongst others. There is evidence to support the thesis that whilst Tamil Nadus’s growth path over the years conforms to the Kuznets inverted U curve paradigm, Kerala’s growth path is far from it. This paper argues that it would be erroneous to claim that Kerala development record is based on low levels and illustrates the returns to be had from emphasising investments in health and education. That which is important for development is a flow of investible resources. Kerala in the earlier years of its development relied on public borrowing for such resources and in recent years it has had heavy inflows of remittances from its diaspora in the Gulf states. Tamil Nadu’s record is largely based on growth and foreign direct investments in its manufacturing sector. This paper argues that the differing growth paths of the two states and their development record is to be traces to history and the institutions, especially the education and political institutions in place in the two states. Kerala possesses a comparative advantage in tourism and health services and should promote these sectors if it were to sustain its development record with a sustainable growth path that is not dependent on uncertain and fluctuating remittances from abroad. Tamil Nadu that has entered the services phase of the Kuznets cycle is likely to grow with services sustained manufactures.

"Cyclicity & Chaotics In Post-crisis Context "

The current global crisis has generated in economic and management theory numerous questions/ dilemmas, because the magnitude of the crisis surprising the entire capitalist world. Juglar cycles, Kuznets cycles and Kondratieff cycles are well known in economic theory but their findings have been deliberately ignored by policy makers. The current theory discusses about the chaotics of the business environment, the instability and highly sinuous evolution of economic life. Regarding the study of cyclicity in business at the firm level, this subject has been and remains more complex by its very nature. From the perspective of our research, we aim to highlight the relation of interdependence between the macroeconomic cycles and business development at the company/firm level.

Economic theory for the new millennium (2003)

Jay Forrester delivered this paper at the 2003 System Dynamics Conference in New York City, which was promoting the theme of “Economic Dynamics”. Jay shared the stage with two economists who had more than a passing familiarity with system dynamics. The first was Jed Shilling, an MIT PhD in economics who had been Forrester's RA for a short time, and had held positions at the World Bank (Head of the Modeling Division) and Gerry Barney's Millennium Institute (Senior Advisor). The second was Glen Atkinson, an institutionalist who was one of the first economists to accept the argument that system dynamics was appropriate for formal economic modeling. All three men presented papers offering their views on the use of system dynamics for economic analysis.Forrester's paper is an interesting read for several reasons. It presents a sweeping overview of the places Forrester feels system dynamics modeling can make significant contributions to economics, including the examination and critique of descriptive theories of economic behavior, explaining major depressions (certainly a relevant contemporary topic), designing economics education curricula for K‐12 students, and helping redesign actual economic systems. Throughout the paper Forrester utilizes structure and behavior from his system dynamics macroeconomic model to illustrate many of his points. Of particular note is that Forrester used the paper to publically reveal, for the first time I think, a significant change in his thinking vis‐à‐vis his decades‐long macroeconomics modeling project. In Forrester's mind, his macroeconomic model was no longer the “System Dynamics National Model” (of the United States Economy), but rather a “general theory of economic behavior.” Indeed, in the paper Forrester emphasizes that good system dynamics modeling practice yields models that are generic in nature and can mimic the behavior of any specific member of a class when properly parameterized for that entity.From a historical perspective, Forrester's paper is another contribution to a decades‐long theme. If one examines Memo D‐0000, the very first paper in the field of system dynamics, one will see that Forrester began critiquing traditional economic modeling, and suggesting a role for system dynamics, back in 1956. Good literature is timeless. Forrester, J.W. 2003.Michael J. Radzicki Economic theory for the new millennium. Plenary address at the International System Dynamics Conference, New York, July 21, 2003.AbstractTraditional mainstream academic economics, by trying to be a science, has failed to answer major questions about real‐life economic behavior. Economics should become a systems profession, such as management, engineering, and medicine. By closely observing the structures and policies in business and government, simulation models can be constructed to answer questions about business cycles, causes of major depressions, inflation, monetary policy, and the validity of descriptive economic theories. A system dynamics model, as a general theory of economic behavior, now endogenously generates business cycles, Kuznets cycles, the economic long wave, and growth. A model is a theory of the behavior that it generates. The economic model provides the theory, thus far missing from economics, for the Great Depression of the 1930s and how such episodes can recur 50–70 years apart. Simpler system dynamics models can become the vehicle for a relevant and exciting pre‐college economics education.

Inequality rose from above, so it shall fall again: Income skewness trends in 16 OECD countries as evidence for a second Kuznets cycle

Advanced industrial democracies experience increasing inequalities or at least a new trade-off between equality and growth: liberal welfare states opted for growth and accepted rising inequality, while conservative welfare states tried to hold back inequality, thereby accepting lower growth. The rise in inequality is widely interpreted with regard to globalization and technological change. This article contrasts this interpretation with an alternative based on the argumentation of Kuznets’s inverted U-turn which is individually reformulated as some diffusion process of some qualification. While threats such as globalization can be reformulated as a ‘negative diffusion process’, a positive diffusion process is also possible. The two alternative mechanisms are identical regarding inequality measures as the Gini coefficient, but they are differentiated in their trend expectations with regard to income distributions’ skewness. In the globalization model, increasing inequality is accompanied first by a fall and later by a rise in skewness, while the qualification diffusion model shows the opposite sequence: rising to a maximum and falling back later on. Due to their different position in the inequality—growth trade-off, liberal and social democratic welfare states are assumed to be ahead in this evolution, while conservative welfare states lag behind. Based on the Luxembourg Income Study, skewness estimations of logged monetary income distributions form an unbalanced panel with 69 observations from 16 OECD countries. A fixed effects regression for the skewness time trend in conservative welfare states and the trend difference for the two other welfare state groups shows strong support for the positive diffusion model, giving rise to the expectation that inequality can and will decrease again.

Why Europe Has to Offer a Better Deal Towards its Muslim Communities: A Quantitative Analysis of Open International Data

Why Europe Has to Offer a Better Deal Towards its Muslim Communities: A Quantitative Analysis of Open International Data

The Reluctant Economist. Perspectives on Economics, Economic History and Demography

List of tables and figures Preface Acknowledgements Part I. Economics: 1. The reluctant economist 2. Economics and the use of subjective testimony 3. Is economic growth creating a new postmaterialistic society? Part II. Economic History: 4. Why isn't the whole world developed? 5. Kuznets cycles and modern economic growth 6. Industrial revolution and mortality revolution: two of a kind? 7. How beneficent is the market? A look at the modern history of mortality Part III. Demography: 8. An economic framework for fertility analysis 9. New perspectives on the demographic transition 10. Does human fertility adjust to the environment? Population change and farm settlement in the northern United States 11. America's baby boom and bust, 1940-80: causes and consequences 12. Preferences and prices in choice of career: the switch to business Epilogue Bibliography Index.

A50 años de la curva de Kuznets: Crecimiento económico y distribución del ingreso en Uruguay y otras economías de nuevo asentamiento desde 1870

This paper tackles the trends in income distribution in Uruguay since circa 1870 on the basis of different sources: relative price movements between 1870–2000 (rental/wage ratios, urban rents/wages, terms of trade), estimates of personal income in main economic sectors (1908–1966) and modern estimates based on household incomes since the 1960s. The results are discussed in relation to the Kuznets curve, widening the perspective through comparisons with other settler societies, such as Argentina, Australia and New Zealand. A common pattern is found: increasing inequality during the first globalization boom, an egalitarian trend since the 1920s and especially during the ISI period, and a new trend with increasing inequality during the second globalization. In Uruguay, no stable correlation is found between growth and income distribution, neither in the long-run, nor during the phases of the Kuznets cycles.

Notes on the Rate of Industrial Growth in Italy, 1861–1913

This article reconsiders industrial growth in post-Unification Italy in light of a new set of sector-specific production estimates. Though still in part provisional, the new series confirm that the production of durables (and related materials) was dominated by the Kuznets cycle. A similar cycle is documented in the growth rate of the residual, excluding foodstuffs, and extended by reasonable assumption to foodstuffs as well. The new series thus support the traditional view of the 1880s as a period of widespread prosperity and above-trend consumption rather than the opposite, now dominant view.This article presents the first comprehensive results of a long-term research project that owes much to the constant encouragement of Pierluigi Ciocca and Gianni Toniolo, to extended exchanges with Giovanni Federico, to the kindness of the librarians at the Bank of Italy and the Istituto centrale di statistica, and not least, for their financial support, to the Ente per gli studi monetari, bancari e finanziari “Luigi Einaudi,” the National Science Foundation, the Guggenheim Foundation, and the Ministero dell'Universita e della Ricerca Scientifica e Tecnologica. The usual disclaimer applies.

Locational restructuring and financial crises

Since 1800, modern economic growth has caused an unprecedented locational restructuring of economies experiencing rapid economic development, a redistribution of population from farms and villages to towns and cities. In free market economies of the past, this urbanization process occurred in Kuznets cycles, averaging 15–25 years in duration. During these cycles, real investment typically occurred in a two-stage sequence — investment in a new production technology followed by investment in urban infrastructure — and resulted eventually in financial crisis and collapse. Recent developments in today’s less developed economies suggest the possible re-birth there of the Kuznets cycles of the past.

Nonlinear mode-interaction in the macroeconomy

A central problem for a dynamic formulation of macroeconomic theory is how to explain the occurrence of different, relatively well-defined economic modes such as the short term business cycle, the construction (or Kuznets) cycle, and the economic long wave (or Kondratiev cycle). Equally important is a description of the various phenomena that can arise through interaction between these cycles. Modern nonlinear theory suggests that different cyclical modes may be entrained through the process of mode-locking, where the periods of the interacting modes adjust to one another, so as to attain a rational ratio. This type of interaction is well documented in physical and biological systems. However, despite the importance of the problem and abundant evidence for nonlinearity in the economy, modern concepts of nonlinear mode-interaction have not yet been applied to the problem of entrainment between economic cycles. We show how mode-locking and other highly nonlinear dynamic phenomena arise in a model of the economic long wave. The behavior of the model is mapped as a function of the frequency and amplitude of an external forcing, producing both a devil's staircase and a detailed Arnol'd tongue diagram. Two different routes to chaos are identified. The Lyapunov exponents are calculated, allowing the strength of the chaos to be assessed, and the fractal nature of the basins of attraction for two simultaneously existing periodic solutions is illustrated. The paper concludes with a discussion of the implications for economic theory.

Long-wave rhythms in economic development and political behavior

Is economic development a random walk or do underlying rhythms and cycles make it possible to anticipate long-term trends? Many social scientists have rejected the notion of long-term periodicity in economic trends. Now, after extensive analysis of economic data, distinguished scholar Brian J. L. Berry has found new evidence for the reliability-- and the value-- of theory. In Long-Wave Rhythms in Economic Development and Political Bahavior, Berry argues that the synchronization of long waves and growth cycles is more than a figment of some overactive imagination. Presenting his findings graphically, he argues that there is persuasive evidence of the existence of deterministic chaos. Applying his analysis of rates of change to the economic phenomena of prices (Kondratiev cycles) and growth (Kuznets cycles), he discovers that pairs of 25-year growth cycles are embedded within 55-year long waves. As a result, Berry concludes, two different kinds of growth cycles-- one inflationary and the other deflationary-- form a complementary pattern of alternating crises with stagflation and depression. Berry also explores the shifting sand of cyclical phenomena in the stock market, voting behavior, the incidence of wars, the rise and fall of great powers, and mass psychologies. While avoiding dogmatic conclusions, he offers a provocative discussion of the long-wave context of social phenomena. As he examines the American economy in long-wave context, Berry optimistically asserts that the bust is not inevitable. Technological advances in information transfer enable leaders and organizations to anticipate and alleviate the adverse effects of economic cycles. Like it or not, he writes, our lives appear to be embedded in a higher order of complexity: collectively, we are a societal organism that displays self-regulating fluctuations around a path of growth.

International resource flows and construction movements in the atlantic economy: the kuznets cycle in Italy, 1861–1913

Nineteenth-century Italy experienced the long swings in migration, capital flows, and construction characteristic of the international Kuznets cycle, but in an unusual combination: its external migration swing may have resembled Britain's, but its capital flows and construction swing resembled America's. Construction in Italy was finance-sensitive rather than population-sensitive, and reacted primarily to exogenous shifts in the supply of foreign capital. The Italian experience suggests that changes in perceived risk altered the relative supply of capital in Britain and abroad and thereby induced the opposite swings in construction and the swing in migration.

The Swedish building cycle and other cycles

This article discusses long‐term fluctuations in Swedish building and construction activity during the period 1850–1985. It concentrates on the last 35 years. A study of the “classical” Kuznets cycle is worked out. The mechanisms which before World War I caused a long swing in building and construction in Sweden are shown here to be of some relevance for the period after World War II as well. Now, as then, the building cycle is linked to a long fluctuation in population and in investments in manufacturing activities. Some differences are observed; Prior to World War I the fluctuating aggregate number of young people was a significant long swing variable. Furthermore, the general long swing in different countries was connected by emigration, capital movements and trade. Subsequent to 1945 transfers of technology have become a significant link mechanism. Furthermore the very strong fluctuation in the number of young and highly trained, became a new important element. The period 1952–1982 exhibited a coheren...