An integrated theory of the economic long wave

Sterman, John D.

doi:10.1016/0016-3287(85)90002-3

Cited by 39 publications

(14 citation statements)

References 19 publications

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“…This noise was felt important trigger to explain the irregularities in the long-cycles, which is apparently the situation in real economy too. As was shown in Sterman's [18] article, simulated results were repeating similar patterns with the real economic development starting from the early 19th century. Similarly to Forrester, Sterman [18] stressed the importance of capital addition as a leading indicator of the real GNP development.…”

Section: Article In Presssupporting

confidence: 74%

“…Sterman [18] highlighted further, how MITs national model works; it needs exogenous information from the development of population, technological progress and per capita government activity. Their system dynamics model also contained some random noise in production as well as ordering behavior of manufacturing sector.…”

Section: Article In Pressmentioning

confidence: 98%

“…This list is not similar to Forrester's [17] classification, which is as follows: (1) business cycle (three to seven years); (2) Kuznets cycles (15 to 20 years long), and (3) Kondratieff cycles (45 to 60 years long). System Dynamics National Model developed by MITs system dynamics group was able to generate the behavior of these latter cycles with system dynamics simulation models [17,18]. In the following is given in a nutshell three different cycle types and their causing factors:…”

Section: Economic Long-cycles and System Dynamicsmentioning

confidence: 99%

“…As research agrees that this is the common nominator for fifth innovation wave, we could proceed further with deductive logic. According to Forrester [17] and Sterman [18], consumer markets are vital part of the innovation wave industries. Also all the previous leading industries in the former waves have been related to consumer markets, (except some applications of nuclear power).…”

Section: Introductionmentioning

confidence: 99%

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Stock market performance and manufacturing capability of the fifth long-cycle industries

Hilmola

2007

Futures

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Section: Article In Presssupporting

confidence: 74%

Section: Article In Pressmentioning

confidence: 98%

Section: Economic Long-cycles and System Dynamicsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Stock market performance and manufacturing capability of the fifth long-cycle industries

Hilmola

2007

Futures

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“…Since 1975 the System Dynamics National Model (NM) has provided an increasingly rich theory of the long wave (Forrester 1981(Forrester , 1979(Forrester , 1977(Forrester , 1976Graham and Senge 1980;Senge 1982;Sterman 1985a, Sterman 1985b This paper describes the integrated theory of the long wave that has now emerged from the NM. The behavioral underpinnings of the theory are discussed and contrasted against traditional economic theory.…”

Section: Introductionmentioning

confidence: 99%

The economic long wave: Theory and evidence

Sterman

1986

System Dynamics Review

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The economic crisis of the 1980s has revived interest in the economic long wave or Kondratiev cycle. Since 1975 the System Dynamics National Model has been the vehicle for the development of a dynamic, endogenous, integrated theory of the economic long wave. This paper describes the integrated theory that has now emerged from extensive analysis of the full National Model and from simple models.Simulations of the model are presented to show the wide range of empirical evidence accounted for by the model, including many of the symptoms of the present economic crisis.In particular, the theory suggests the long wave arises from the interaction of two fundamental facets of modern industrial economies. First, the existence of physical lags in the economy, information limitations, and bounded rationality in economic decisionmaking creates the potential for oscillatory behavior. For example, the physical lags in capital acquisition coupled with locally rational decision rules governing production and investment create the potential for highly damped fluctuations in capital investment with a period of roughly twenty years. In isolation, these oscillatory structures are stable and do not produce a long wave.However, a wide range of self-reinforcing processes exist which amplify the inherent oscillatory tendencies of the economy, leading to the long wave.A large number of these self-reinforcing processes have been identified.These processes involve many sectors of the economy including capital investment, labor markets and workforce participation, real interest rates, inflation, debt, savings and consumption, and international trade.The paper discusses the relative strengths of these mechanisms and the amplification of the long wave through their interactions. The linkages of the long wave theory to innovation, technological progress, social innovation, and political value change are discussed.

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Jay Forrester's operational approach to economics

Saeed

2014

System Dynamics Review

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Jay Forrester's models evoke an operational approach to understanding economic behavior and managing economic systems. They build on managerial roles, not rational agency embedded in mainstream models of economic theory. Forrester's models can therefore be easily tied to policies that relate to everyday decisions. His writings provide deep insights that can be effectively applied to managing firms, regions, nations and the global economic system. This paper discusses Forrester's approach to addressing economic problems, and how it calls for rethinking the practice of economics. Copyright © 2015 System Dynamics Society

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An integrated theory of the economic long wave

Cited by 39 publications

References 19 publications

Stock market performance and manufacturing capability of the fifth long-cycle industries

Stock market performance and manufacturing capability of the fifth long-cycle industries

The economic long wave: Theory and evidence

Jay Forrester's operational approach to economics

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