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Industrial Sector Mode-Locking and Business Cycle Formation

Author

Listed:
  • Selover David D.

    (Old Dominion University)

  • Jensen Roderick V.

    (Wesleyan University)

  • Kroll John

    (Old Dominion University)

Abstract

This study investigates the synchronization of business cycles in different sectors of the economy. Business cycles in different industries or sectors have a tendency to synchronize with one another in what appears to be a national business cycle, yet trade between sectors may not be strong enough for one sector to "drive" business cycle fluctuations in another sector. How are these sectors synchronized? This study suggests that the national business cycle results from a "mode-locking" phenomenon between different sectors, a nonlinear process through which weak coupling between oscillating systems (sectors) tends to synchronize the fluctuations between the oscillating systems (sectors). Simulations, statistical analysis, and spectral analysis are used to attempt to verify this hypothesis. Investigation reveals a moderate amount of econometric support for the sectoral mode-locking hypothesis of business cycle formation.

Suggested Citation

  • Selover David D. & Jensen Roderick V. & Kroll John, 2003. "Industrial Sector Mode-Locking and Business Cycle Formation," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 7(3), pages 1-39, October.
    • Handle: RePEc:bpj:sndecm:v:7:y:2003:i:3:n:2
    DOI: 10.2202/1558-3708.1119
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    References listed on IDEAS

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    Cited by:

    1. Barnett William A & Dalkir Mehmet S, 2007. "Gains from Synchronization," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 11(1), pages 1-30, March.
    2. David D. Selover & Roderick V. Jensen & John Kroll, 2005. "Mode‐Locking and Regional Business Cycle Synchronization," Journal of Regional Science, Wiley Blackwell, vol. 45(4), pages 703-745, November.
    3. Yuichi Ikeda, 2020. "An Interacting Agent Model of Economic Crisis," Papers 2001.11843, arXiv.org.
    4. Larry Filer & David D. Selover, 2014. "Why Can Weak Linkages Cause International Stock Market Synchronization? The Mode-Locking Effect," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(3), pages 20-42, July.
    5. Y. Ikeda & H. Aoyama & Y. Fujiwara & H. Iyetomi & K. Ogimoto & W. Souma & H. Yoshikawa, 2011. "Coupled Oscillator Model of the Business Cycle with Fluctuating Goods Markets," Papers 1110.6679, arXiv.org.
    6. Makoto Nirei, 2004. "Lumpy Investment, Sectoral Propagation, and Business Cycles," Computing in Economics and Finance 2004 330, Society for Computational Economics.

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