5 Top Cycles to always keep in mind…

5 Top Cycles to always keep in mind…

Definition of a Cycle

An interval of time during which a characteristic, often regularly repeated event or sequence of events occurs: eg. Sunspots increase and decrease in intensity in an 11-year cycle. SOURCE

Sentiment in a Cycle


Cycle/Wave Name Years

Kitchin inventory


Juglar fixed investment


Kuznets infrastructural investment


Kondratiev wave


Grand supercycle


Kitchin cycle 3-5 years



Joseph Kitchin (1861–1932) was a British businessman and statistician. Analysing American and English interest rates and other data, Kitchin found evidence for a short business cycle of about 40 months.[1]. His publications led to other business cycle theories by later economists such as Nikolai KondratieffSimon Kuznets, and Joseph Schumpeter.

Juglar cycle 7 -11 years

Juglar cycle is a fixed investment cycle of 7 to 11 years identified in 1862 by Clement Juglar.[1] Within the Juglar cycle one can observe oscillations of investments into fixed capital and not just changes in the level of employment of the fixed capital (and respective changes in inventories), as is observed with respect to Kitchin cycles. 2010 research employing spectral analysis confirmed the presence of Juglar cycles in world GDP dynamics.[2]

Clément Juglar (15 October 1819 – 28 February 1905) was a French doctor and statistician.

Kuznets swing 15-25 years

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.[2]

Kuznet’s finding was debunked by Howrey (1968).[3] Howrey claimed that the apparent business cycle found by Kuznets was an artifact of the filter Kuznets used. Howrey suggested that the same cyclical pattern could be found in white noise series when the Kuznets filter was applied.[4] However, Kuznets claims swings can be found in the world GDP dynamics even without the application of the Kuznets filter.[5]


Kondratiev wave 45-60 years

Kondratiev waves (also called supercyclesgreat surgeslong wavesK-waves or the long economic cycle) are described as sinusoidal-like cycles in the moderncapitalist world economy.[1] Averaging fifty and ranging from approximately forty to sixty years, the cycles consist of alternating periods between high sectoral growth and periods of relatively slow growth.[2] Unlike the short-term business cycle, the long wave of this theory is not accepted by current mainstream economics.

History of concept

The Soviet 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.[3][4] 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.[citation needed]

Kondratiev’s ideas were not supported by the Soviet government. Subsequently he was sent to the gulag and was executed in 1938.[3][4]



The late-2000s financial crisis has increased an interest in the theories of long economical cycles as a potential explanation of its cause.[5]

The historian Eric Hobsbawm wrote of the theory: “That good predictions have proved possible on the basis of Kondratiev Long Waves—this is not very common in economics—has convinced many historians and even some economists that there is something in them, even if we don’t know what.” [6]

Characteristics of the cycle

Kondratiev identified three phases in the cycle: expansion, stagnation, recession. More common today is the division into four periods with a turning point (collapse) between the first and second phases. Writing in the 1920s, Kondratiev proposed to apply the theory to the 19th century:

  • 1790–1849 with a turning point in 1815.
  • 1850–1896 with a turning point in 1873.
  • Kondratiev supposed that, in 1896, a new cycle had started.

The long cycle supposedly affects all sectors of an economy. Kondratiev focused on prices and interest rates, seeing the ascendant phase as characterized by an increase in prices and low interest rates, while the other phase consists of a decrease in prices and high interest rates. Subsequent analysis concentrated on output.

Explanations of the cycle

Technological innovation theory


File:Kondratieff Wave.svg


In recent decades there has been considerable progress in historical economics and the history of technology, and numerous investigations of the relationship between technological innovation and economic cycles. Some of the works involving long cycle research and technology include Mensch (1979), Tylecote (1991), The International Institute for Applied Systems Analysis (IIASA) (Marchetti, Ayres), Freeman and Louçã (2001) and Carlota Perez.

Perez (2002) places the phases on a logistic or S curve, with the following labels: beginning of a technological era as irruption, the ascent as frenzy, the rapid build out as synergy and the completion as maturity.[7]

Demographic theory

Because people have fairly typical spending patterns through their life cycle, such as schooling, marriage, first car purchase, first home purchase, upgrade home purchase, maximum earnings period, maximum retirement savings and retirement, demographic anomalies such as baby booms and busts exert a rather predictable influence on the economy over a long time period. Harry Dent has written extensively on demographics and economic cycles. Tylecote (1991) devoted a chapter to demographics and the long cycle. [8]

Modern modifications of Kondratiev theory

There are several modern timing versions of the cycle although most are based on either of two causes: one on technology and the other on the credit cycle.

Additionally, there are several versions of the technological cycles, and they are best interpreted using diffusion curves of leading industries. For example, railways only started in the 1830s, with steady growth for the next 45 years. It was after Bessemer steel was introduced that railroads had their highest growth rates; however, this period is usually labeled the “age of steel”. Measured by value added, the leading industry in the U.S. from 1880 to 1920 was machinery, followed by iron and steel.[9]

The technological cycles can be labeled as follows:

  • The Industrial Revolution—1771
  • The Age of Steam and Railways—1829
  • The Age of Steel and Heavy Engineering—1875
  • The Age of Information and Telecommunications—1971


A typical, somewhat updated sequence of technological Kondratiev Waves in the U.S. and some other leading Western economies can be seen in the table below: [12]

Grand supercycle 70+


Like all Elliott Waves, Grand Supercycle waves are subdivided into smaller generations of waves. The next smaller generation of waves are those of Supercycle degree. Modern applications of the Wave Principle also describe waves of larger degree spanning millennial periods of time, such as the Millennium Wave.[2]

Modern application of Elliott Wave Theory posits that a Grand Supercycle wave 5 is completing in the 21st century and should be followed by a corrective price pattern of decline that will represent the largest economic recession since the 1700s.[3]



File:Kondratieff Wave.svg