The physics of business cycles and inflation

Hans G. Danielmeyer, Thomas Martinetz

Abstract

We analyse four consecutive cycles observed in the USA for employment and inflation. They are driven by three oil price shocks and an intended interest rate shock. Non-linear coupling between the rate equations for consumer products as prey and consumers as predators provides the required instability, but its natural damping is too high for spontaneous cycles. Extending the Lotka-Volterra equations with a small term for collective anticipation yields a second analytic solution without damping. It predicts the base period, phase shifts, and the sensitivity to shocks for all six cyclic variables correctly.
Original languageEnglish
JournalarXiv:1212.1282v1 [q-fin.GN]
Number of pages3
Publication statusPublished - 2012

Fingerprint

Dive into the research topics of 'The physics of business cycles and inflation'. Together they form a unique fingerprint.

Cite this