A long-commodity-cycle model of the world economy over a century and a half — Making bricks with little straw

Vo Phuong Mai Le, David Meenagh and A. Patrick Minford

Energy Economics, 2019, vol. 81, issue C, 503-518

Abstract: This paper explores the world business cycle using unfiltered data from 1870 and looks for a theory that could account for the long wave commodity cycle in the world economy. We build a simple DSGE model that includes a long time-to-build constraint in the commodity sector. We find that this model can produce long cycles in output and commodity prices as introduced by Kontradieff (1925) and Schumpeter (1934). Our findings show that these long business cycles are produced by the long gestation of commodity capacity which causes very large swings in commodity prices.

Keywords: Long waves; Commodities; DSGE model; Indirect Inference (search for similar items in EconPapers)
JEL-codes: E10 E32 E52 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988319301252
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:81:y:2019:i:c:p:503-518

DOI: 10.1016/j.eneco.2019.04.011

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().