Known by some people as the Kondratiev cycle, the Kondratiev wave refers to an economic theory that states that the capitalist economies of the West are more susceptible to volatility of high performance. The theory was created by a Soviet economist called Nikolai Kondratiev. In creating this theory, Nikolai referred to these high performance fluctuations as вЂsuper cycles. This could be attributed to the longer duration of time that they lasted; between 50 to 60 years.
The period of the cycles or waves is comprised on alternating intervals that are characterized by high and low growths. Compared to the rather short business cycles, the extensive cycle of Kondratiev wave theory has not been generally accepted by the current economists. However, there is a small fraction that supports it.
Characteristics of the Kondratiev Wave
When designing this theory, Nikolai pointed out three phases in the wave that includes expansion, stagnation and recession. The version that is available today comprises of four periods that are enhanced with a turning point positioned at the center of the first and second phases. When writing the theory in 1920s, Nikolai was determined that the theory be applied in the 19 th century.
The long cycle that is the main characteristic of the wave has great impact on every sector of an economy. Kondratiev’s main emphasis was laid on interest rates and prices. His view was that the ascendant phases was determined by increased prices and reduced interest rates. The other phase on the other hand, showed decreased prices and high interest rates. The analysis was on the output.
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- Modern modifications of the Kondratiev theor
Today, there are several timing versions of the Kondratiev cycle today, however, a good number of them are based on either technology or credit cycle. Besides, there are also a variety of technological cycles versions that are best interpreted through the use of diffusion curves of the industries that have indicated the top performance.
- Below are the technology cycles
- The Industrial Revolution-1771
- Age of Steam and Railways-1829
- The Age of Steel and Heavy Engineering- 1875
- The Age of Oil, Electricity, Automobile and Mass production 1908
- The Age of Information and Telecommunications- 1971
Even though the Kondratiev wave has been described by some people as a great invention, a good number of academic economists have not really liked it. The criticism raised by them is that the theory amounts to observing patterns in various statistics that are do not really exist. Besides, others are also not in agreement on what causes this phenomenon. One of those who have criticized the theory have pointed out that when historical growth phases are combined with key technologies, the implication does not necessarily mean that regular cycles generally exist.
There were claims by Nikolai that he predicted the 1929 market crash which came to be described as the Black Thursday. According to him, the prediction was influenced by the market crash that took place in 1870.
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