Second Order Dynamics of Economic Cycles

by Purica, Ionut and Caraiani, Petre
Published in Romanian Journal of Economic Forecasting
, 2009, volume 10 issue 1, 36-47

 Requires a PDF viewer such as Xpdf or Adobe Acrobat Reader


The monthly data of the industrial production in Romania after the structural discontinuity occurring at the end of 1989 show an under-damped oscillatory behavior
that suggests an evolution of second order systems excited by a step function. Since this behavior is well described in control systems we are doing what the literature usually calls a reversed engineering of the data in order to identify the specific parameters for the economic cycle of industrial production. The final goal is to determine the second order differential equation that may be associated to the
economic process related to industrial production evolution. This paper is a first contribution that opens an alternative approach to describe the economic dynamics.

Keywords: business cycles, simulations, nonlinear methods, transition economies, mathematical methods
JEL Classification:
C02, E32, E37