Break-through research into the fundamental causes of the business cycle fluctuations
Over the last 77 years (from 1935), all 7 cyclical maximums of the solar activity overlapped closely with the US recessions, thus predicting (or triggering?) 8 out of 13 recessions officially identified by NBER (including one “double-deep” recession). Over the last 64 years (from 1948), all 6 maximums of the solar activity were preceded by minimums of the US unemployment rate, and the spikes in the unemployment rate followed with lags of 2-3 years. On the world scale, over the last 44 years (for which the data is available), all 4 maximums of the solar activity overlapped with minimums of the unemployment rate in the G7 countries, followed by its spikes within 2-3 years. From 1965, when consistent recession dating is available for all G7 countries, nearly 3/5 of the recessions started in the 3 years around and after the sunspot maximums. Was it a mere coincidence or a part of a broader pattern? This paper explores the correlation between the solar activity cycles (as measured by the number of sunspots on the sun surface) and the timing of recessions in the US and other economies. It finds out that the probability of recessions in G7 countries greatly increased around and after the solar maximums, suggesting that they can cause deterioration in business conditions and trigger recessions. This opens new approach for projecting recessions, which can be applied and tested with regard to the next solar maximum in 2013.
Caution: This research is not in the “mainstream” of the economic thought. Read at your own risk!
Drawing on previous literature and new research, this study proposes a consistent theoretical explanation of the empirically observed impact of the cyclical fluctuations in the solar activity on economic conditions. The data reveal that unemployment increases, consumer and business confidence drops, and recessions in the US and G7 countries occur much more frequently in the years around and after the solar maximums. This is consistent with the findings of the Russian scientist Alexander Chizhevsky, who in the early XX century claimed that the cyclical maximums in the solar activity affect human behavior in a very fundamental way. In particular, they increase the occurrence of revolutions, riots, and mass movements, and lead to intensification of political life. Apart from producing direct negative impact on the economies of the affected countries, such commotions increase uncertainty, which hampers consumer and business confidence, weakens economic activity and, ultimately, triggers recessions.
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