Hot and Cold Flushes in Business Cycles?

All modern industrial economies experience significant swings in economic activity. The now standard definition of business cycles was provided by Arthur Burns and Wesley Mitchell in "Measuring Business Cycles", where a cycle consists of a time of expansion with increased general economic activity, followed by a time of recession.

Deviation from long-term growth in the US GDP

Here it is important to note that the term cycle seems to be somewhat misleading. In fact, looking at the data one gets the impression that there are hardly any patterns that would allow us to account for regularity in both timing and duration of upswings and downswings.  The figure to the right shows a business cycle for the US economy from 1955 to 2005. Recessions in the figure are negative deviations from trend. Clearly, both recessions and expansions vary significantly in both duration and intensity.

This UROP will focus on the varying magnitude and on the volatility of this curve. Starts and stops to economic activity do seem to come about very sudden and do seem to vary in their impact. We  can see  hot and cold flushes, represented by the many turning points of the curve. Some of them do eventually turn the economy around (the points of largest deviation in a particular period), but most of them seem to disappear more or less immediately after they have occurred.

This UROP will take a complexity point of view on this occurrence of hot and cold flushes  and observe what this can teach us about the way in which we could interpret and improve our handling of such events. I want to discuss how we can view the economy as a complex system and how the introduction of road traffic and the behavior of ants and birds as reference models can help us to improve our understanding of aggregate economic behavior.