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Book part

Fanny Coulomb, Liliane Bensahel-Perrin and Jacques Fontanel

The issue of the link between wars and economic cycles and the sense of the causality has given rise to many economic studies. The statistical works of N. D…

Abstract

The issue of the link between wars and economic cycles and the sense of the causality has given rise to many economic studies. The statistical works of N. D. Kondratiev11Kondratiev (1935). This paper is a synthetic presentation of Kondratiev's works during the 1920s. in the 1930s, showing the existence of long economic cycles regulating capitalism, have contributed much to the economic cycles' theory. This analysis based on the observation of long-term economic changes in GDP growth rates and/or price levels shows some rising and declining phases, as well as reversal points of the cycles. Among the most easily identifiable phenomena are the following: the economic crisis of the 1930s, the post–Second World War growth period, and the economic crisis that started in the 1970s. However, as shown by a study of Tylecote, A. (1992). History as a forecasting tool: The future of the European economy in a long-wave/long-cycle perspective. Review of Political Economy, 4(2), 226–248. The long economic cycles are less identifiable for the period 1850–1930, unless the disruptive effects of the American Civil War and First World War are considered: their recessive and then reflationary effects would have disrupted the rising and declining phases. But some analyses present war as being a central factor in long-term economic changes.

Modelski, G. (1987). Long cycles in world politics. London: Macmillan of long cycles had become very famous in the 1980s. It identifies cycles of 100–120 years, starting with an exceptionally long global war (it may also be a more discontinuous phase of war, like the two world wars) and giving rise to a new dominant power. Its technological and commercial domination permits keeping an uncontested supremacy, until some competing powers start to erode it. However, this theory does not focus on the links between major wars and long-term economic changes.

This issue having been largely studied in the past, the first part of the paper will present a review of these analyses. Then in the second part, it will ask if these ideas may help in predicting future major economic crises and related international conflicts. It is a delicate task, as it is as difficult to show subsequently a link between economic cycles and major wars as to predict future cyclical phenomena on the world economic and political scene.

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Frontiers of Peace Economics and Peace Science
Type: Book
ISBN: 978-0-85724-701-8

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Article

Peterson K. Ozili

This study aims to investigate the relationship between financial inclusion and the business cycle.

Abstract

Purpose

This study aims to investigate the relationship between financial inclusion and the business cycle.

Design/methodology/approach

Regression methodology is used to analyze the association between financial inclusion and the business cycle.

Findings

Using regression estimation, the findings reveal that the level of savings and the number of active formal account ownership are pro-cyclical with fluctuations in the business cycle. Also, savings by adults particularly for women and poor people declines during recessionary periods while the number of active formal account ownership declines for the adult population especially for women during recessionary periods. The findings also reveal that not all indicators of financial inclusion are pro-cyclical with fluctuating business cycles.

Practical implications

The implication of this observed pro-cyclical effect is that individuals and households will exit the formal financial sector during a recession, as banks become unwilling to lend money to individuals and households during bad times and this will lead to financial exclusion and vice versa. Policymakers seeking to increase the level of financial inclusion in their countries should focus on the timing of financial inclusion policies along the business cycle as the findings suggest that it might be more difficult to achieve financial inclusion objectives during recessions or periods of economic downturns.

Originality/value

The current debate on financial inclusion pays little attention to whether financial inclusion is pro-cyclical with the fluctuating business cycle. This study explores the association between financial inclusion and the business cycle.

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Article

Conglai Fan and Gao Jiechao

In recent years, with the gradual differentiation of economic and financial cycles, it has been increasingly difficult for monetary policies to remain balanced in…

Abstract

Purpose

In recent years, with the gradual differentiation of economic and financial cycles, it has been increasingly difficult for monetary policies to remain balanced in stabilizing both economy and finance. Taking the period of 1999–2017 as a sample, the purpose of this paper is to find whether the synergy between the growth cycle and the price cycle is constantly improving in the economic cycle is more appropriate.

Design/methodology/approach

The key to stabilizing the economic cycle lies in the monetary policy and it should abandon the goal of boosting growth in a timely manner and turn into the goal of maintaining steady growth. At present, quantitative monetary policy is still more effective than price-oriented monetary policy in smoothing the economic cycle.

Findings

The impact of quantitative regulation on the financial cycle is more neutral, whereas price regulation will increase the volatility of price and financial cycles in the course of smoothing the growth cycle. In view of the continuous differentiation between the economic and financial cycles, it is realistic and reasonable to accelerate the establishment of a sound dual-pillar regulatory framework of “monetary policy and macro-prudential policy.”

Originality/value

The macro-prudential policy is specially used to smooth the financial cycle, so as to reduce the burden and increase the efficiency of the monetary policy on regulating economic cycle. Moreover, the transformation of monetary policy to price-oriented regulation must keep pace with the construction of the dual-pillar regulation framework and complement each other to prevent undesirable consequences in the financial sector. On the other hand, monetary policy still needs to rely on quantitative regulation in the future. The research in this paper also provides a new perspective for understanding the internal and external reform of China’s monetary policy in recent years.

Details

China Political Economy, vol. 2 no. 2
Type: Research Article
ISSN: 2516-1652

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Article

Cedric Pugh and Alireza Dehesh

Since 1980, property cycles have emerged emphatically as a phenomenon of urban development in both developed and developing countries. Among the many things which need to…

Abstract

Since 1980, property cycles have emerged emphatically as a phenomenon of urban development in both developed and developing countries. Among the many things which need to be explained is the continuing high levels of financial investment in property sectors, even well past the time when supply exceeds demand and vacancy rates continue to grow. Various intellectuals have put forward new theories and some situational explanations of the periodic over‐capitalisation in property. The economic adversities are not confined to the property and finance sectors. They extend into the socio‐economic performance of national economies, and in some cases they have international linkages and impacts. Gives exposition and evaluation relating to cyclicity in the USA, the UK, Japan, and some developing countries in Asia. The aim is mainly centred on explanation and theory, extending earlier published work in the authors’ research programmes in property cycles, urban development, and experience in both developing and developed countries. The economic, social, and political significance of property cycles is enormous.

Details

Property Management, vol. 19 no. 4
Type: Research Article
ISSN: 0263-7472

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Article

Claudio Giannotti and Lucia Gibilaro

The minimization of financial losses and costs stemming from the credit recovery process is strictly connected with the time necessary to complete the procedure: in real…

Abstract

Purpose

The minimization of financial losses and costs stemming from the credit recovery process is strictly connected with the time necessary to complete the procedure: in real estate credits, it depends on the liquidity and the efficiency of the enforcement procedures. The purpose of this paper is to test the relevance of the economic cycle in Italy on the determinants of the recovery process both at national and regional level.

Design/methodology/approach

The first step is to identify the determinants of the real estate loans recovery process duration by the means of the review of the existing literature. The second step develops an empirical analysis to appraise the relevance of the economic cycle on the liquidity of the real estate market and efficiency of real estate enforcement proceedings. The relevance of the economic cycle is verified through, first, a correlation analysis of the selected indexes with the national and regional gross domestic product (GDP) and, second, a regression analysis of the selected indexes on the current and lagged GDP. As it concerns the liquidity of the real estate market, a turnover index is considered stratified both at sectoral and geographical level, while for the real estate enforcement procedures the paper analyzes indexes based on both the turnover of ended and filed proceedings and the pending proceedings outstanding at the year‐end.

Findings

The empirical results demonstrated that, in some sectors and geographic areas, the market liquidity is influenced by the national and the regional economic cycles, both expressed at current values and, moreover, the sign of the relationship is frequently negative. As it concerns the enforcement procedures efficiency, empirical evidence does not support the direct influence of the current or past economic cycle on it, leaving room for the relevance of the competent court specific features.

Originality/value

The paper considers the Italian market, that is featured by a moderate level of the average loan to value and, above all, by lengthiness administrative procedures. The paper contributes to the existing literature through the integrated examination of the relationship between the recovery process determinants and the national and regional economic cycles over different geographic areas.

Details

Journal of European Real Estate Research, vol. 2 no. 3
Type: Research Article
ISSN: 1753-9269

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Article

Claudio Ferrari, Malvina Marchese and Alessio Tei

Economic studies have always underlined the cyclical trends of many industries and their different relations to the macro-economic cycles. Shipping is one of those…

Abstract

Purpose

Economic studies have always underlined the cyclical trends of many industries and their different relations to the macro-economic cycles. Shipping is one of those industries and it has been often characterised by peaks that have influenced both the trade patterns and industry investment structure (e.g. fleet, shipyard activity, freight rates). One of the main issues related with the cycles is the effect on overcapacity and prices for newbuilding and how the understanding of these patterns can help in preventing short-hand strategies. The purpose of this paper is to evaluate different effects of business elements on shipbuilding activity, in relation to different economic-cycle phases.

Design/methodology/approach

This paper proposes a non-linear econometric model to identify the relations between shipbuilding and economic cycles over the past 30 years. The research focuses on identifying the cycle characteristics and understanding the asymmetrical effect of economic- and business-related variables on its development.

Findings

The study underlines the presence of an asymmetric effect of several business variables on the shipbuilding productions, depending on the cyclical phases (i.e. market expansion or economic slowdown). Moreover, lagged effects seem to be stronger than contemporaneous variables.

Originality/value

The paper is a first attempt of using non-linear modelling to shipbuilding cycles, giving indications that could be included in relevant investment policies.

Details

Maritime Business Review, vol. 3 no. 2
Type: Research Article
ISSN: 2397-3757

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Book part

Aleksei V. Bogoviz, Alexander N. Alekseev, Olga V. Titova, Valentina V. Latysheva and Aleksei D. Ragulin

The purpose of the chapter is to study dynamics of development of economic conflicts and to develop a conceptual model of conflict of socio-economic system as an analog to…

Abstract

Purpose

The purpose of the chapter is to study dynamics of development of economic conflicts and to develop a conceptual model of conflict of socio-economic system as an analog to the model of economic cycle.

Methodology

The author compiles and analyzes the existing conceptual static model of conflict of a socio-economic system. The theoretical basis of the research includes the works of modern authors that reflect provisions of the theory of cycles and devoted to cyclic fluctuations of socio-economic systems. The methodology of the chapter includes the method of dynamic modeling of the process of development of socio-economic systems and the method of formalization (graphic presentation of the obtained results and conclusions). Also, the author uses the complex of general scientific methods within the systemic approach – induction, deduction, analysis, and synthesis.

Conclusions

It is substantiated that the existing conceptual static model of economic conflict, which treats it as a non-recurrent phenomenon in socio-economic system, contradicts its dynamic nature. Instead of this, similarly to the model of economic cycle, a conceptual dynamic model of conflict of socio-economic system is developed, which treats economic conflict as a process that develops according to a certain algorithm and is constantly repeated.

Originality/value

The offered conceptual model of conflict of a socio-economic system as an analogue of the model of economic cycle allows specifying the methodology of studying economic crises, which are manifestations/examples of economic conflicts. This model emphasizes the dichotomic nature of economic conflict (its probable negative or positive consequences), which allows for more precise treatment of economic crisis – which is usually considered to be a negative phenomenon. According to the offered model, crisis is not a phase of economic cycle but socio-economic process that is characterized by cyclic fluctuations. As is expected, the developed model will allow describing the practice of development of modern socio-economic systems with higher precision.

Details

“Conflict-Free” Socio-Economic Systems
Type: Book
ISBN: 978-1-78769-994-6

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Article

Todd Kuethe and Todd Hubbs

This study examines the relationship between economic fluctuations and financial distress in the US agricultural sector, which is associated with a large degree of…

Abstract

Purpose

This study examines the relationship between economic fluctuations and financial distress in the US agricultural sector, which is associated with a large degree of financial instability.

Design/methodology/approach

The authors developed a parsimonious model of economic fluctuations in the US agricultural sector. The authors used statistical filter methods to identify the co-movement in cyclical fluctuations in real, cumulative growth rates in farm real estate values, farm sector debt and leverage.

Findings

The proposed model closely approximated the financial evolution of the US agricultural sector between 1960 and 2018. In addition, the authors proved that the proposed model is an early warning indicator of farm loan delinquencies and farm bankruptcies.

Originality/value

This study exploits recent advances in economic theory and empirical macroeconomic modeling to develop a model that is a robust predictor of financial distress in the agricultural sector. Further, the authors demonstrate that the policy interventions following the 1980s farm financial crisis demonstrate the likely long-run economic response to the policies enacted following the 2008 financial crisis.

Details

Agricultural Finance Review, vol. 81 no. 1
Type: Research Article
ISSN: 0002-1466

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Article

James DeLisle and Terry Grissom

Current economic conditions have identified a complication if not conflict in the application of valuation analysis assumptions with the free fall in asset prices observed…

Abstract

Purpose

Current economic conditions have identified a complication if not conflict in the application of valuation analysis assumptions with the free fall in asset prices observed since 2007. Discrepancies in debt obligations (from prior periods) with underlying collateral value have been opined to be an unforeseen anomaly. This investigation aims to observe an alternative perspective using data from 1900 to the present.

Design/methodology/approach

This 110‐year period of observation shows that return (value) volatility is the characteristic norm of the market system. Showing volatility as a fundamental characteristic of economic and property performance supports conjecture by definition, observation and rationality that valuation analysis had to be successfully employed in prior down cycles and across divergent economic regimes. A systematic literature search was conducted to identify the application of specific value theory, premises and concepts with appropriate valuation techniques in given economic regimes. The variables derived from the literature and practices observed and designated as operating across time emphasizing recorded recessions are then tested for statistically significant associations using χ2 tests.

Findings

The findings show that traditional value techniques are successfully applied in stabilized and even accelerated growth periods, but weaken and even break down during down markets. Alternative approaches and techniques are emphasized and developed during these periods that address specific problems but are befitting more general issues. The alternative perspectives are then observed to operate, generating much debate for extended periods. They are then incorporated as orthodox or disappear as issues. This study identifies a statistical link between the economic and valuation concerns of the Great Depression of the 1930s and the current Great Recession of 2007‐2009. The more relevant finding, however, is that the period following the depression of the 1930s, which shows a period characterized as using innovation and alternative valuation techniques, was continued into a period that ran from the 1950s into the mid‐1990s. This was a period of stabilization, at least into the early 1980s. The deregulation of the 1980s generated a period of fewer cycles but major magnitude shifts in the less frequent measures of volatility. Unfortunately, the sophistication in debate concerning valuation procedure and valuation premises, as statistically measured, declined from the 1990s into the present period. The present economy reflects statistical measures similar to those observed from 1900‐1930.

Originality/value

Given the 110 years considered in the study, the findings should not be considered original with regard to assisting the general welfare or professional decision making. However, given that the market shifted from being a useful institution to assist in the allocation and distribution of property to being a religious caveat that could only result in perfect solutions to solve all social needs, wants and ills, the findings emphasizing valuation techniques based on rational value premises that can operate to assist inference of future events subject to divergent and cyclical operations might be calmed to offer very useful assistance with procedure based on fundamentals and expression of behaviour that has long been vilified. The uses of the patterns identified in this study need to be incorporated into causal analysis.

Details

Journal of Property Investment & Finance, vol. 29 no. 4/5
Type: Research Article
ISSN: 1463-578X

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Book part

Daniele Besomi

This chapter enquires into the contribution of two British writers, Herbert Somerton Foxwell and Henry Riverdale Grenfell, who elaborated upon the hints provided by Jevons…

Abstract

This chapter enquires into the contribution of two British writers, Herbert Somerton Foxwell and Henry Riverdale Grenfell, who elaborated upon the hints provided by Jevons towards a description of long waves in the oscillations of prices. Writing two decades after Jevons, they witnessed the era of high prices turning into the great depression of the last quarter of the nineteenth century, the causes of which they saw in the end of bimetallism. Not only did they take up Jevons’s specific explanation of the long fluctuations, but they also based their discussion upon graphical representation of data and incorporated in their treatment a specific trait (the superposition principle) of the ‘waves’ metaphor emphasized by the Manchester statisticians in the 1850s and 1860s. Their contribution is also interesting for their understanding of crises versus depressions at the time of the emergence of the interpretation of oscillations as a cycle, which they have only partially grasped – as distinct from the approach of later long wave theorists.

Details

Research in the History of Economic Thought and Methodology
Type: Book
ISBN: 978-1-78560-960-2

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