Saturday, February 26, 2011

The really long cycles

The K-Wave (half a Kondratiev cycle)
The Russian economist Nikolai Kondratiev (also written Kondratieff) was the first to bring these observations to international attention in his book The Major Economic Cycles (1925) alongside other works written in the same decade. Two Dutch economists, Jacob van Gelderen and Samuel de Wolff, had previously argued for the existence of 50 to 60 year cycles in 1913. However, the work of de Wolff and van Gelderen has only recently been translated from Dutch to reach a wider audience.

More recently, some argue that government intervention into the economy to try and control economic cycles has lengthened the cycle to around 64 years. Most refer to this as a K-Wave.

The Super cycle
Others such as Elliott have speculated there are longer cycles (Grand Supercycle). Also, supposedly within a Grand Supercycle there are shorter (yet long) cycles known as Supercycles. How does a Supercycle fit within the context of a K-Wave? Well, some claim within a K-Wave there are two Supercycles (each half the length of a K-Wave).

And then there is Kuznets
Simon Kuznets (Nobel Prize winner) studied demographics and from his studies found cyclic trends. Kuznets swing is a claimed medium-range economic wave with a period of 15-25 years found in 1930 by Simon Kuznets.[1] Kuznets connected these waves with demographic processes, in particular with immigrant inflows/outflows and the changes in construction intensity that they caused, that is why he denoted them as "demographic" or "building" cycles/swings. Kuznets swings have been also interpreted as infrastructural investment cycles.

So a Kuznets cycle is half a Supercycle. So a K-wave is 2 Supercycles or 4 Kuznets cycles...

The Fork in the road

We have talked about the Kitchin cycles and Wall cycles in the past. But a gentleman last name Juglar claims there is a 8-11 year cycle and like stars they named it after him (the Juglar cycle). Many have related this to the Kuznet Cycle (half a Kuznets cycle) and the Kitchin Cycle (2 Kitchin cycles). This implies 8 Juglar cycle within a K-wave and 16 Kitchin cycles in a K-Wave.

If a K-Wave is 64 years that is 768 months. A Kitchin cycle is 42 months +/-. We did the math and find a 64 year K_Wave is 18 Kitchin cycles.... So we are not happy with the Kitchin/Juglar relationship.

We have told you about the 10 year cycle (and how it is approximately 3 Kitchin cycles). We do the math and a K-Wave is 6.4 ten year cycles (or 6 x 10.57 years). Three Kitchin Cycles of 42 months (3.5 years) is 10.5 years.  I believe this relationship works better than the Juglar/Kitchin relationship.

There is some dispute as to whether there are 16 or 18 Kitchin cycles within a K-Wave. I tend to believe there are 18 (6 X 10+ year cycles or 3 X 6 Kitchin cycles).

And as always here is a visual (K_wave, Supercycle, Kuznets  - updated 02-27):

Enjoy the big picture. 

Later we will try to tie in the shorter cycles we discussed.

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