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THE MONTE CARLO CYCLE IN BUSINESS ACTIVITY
Author(s) -
Mcculloch J. HUSTON
Publication year - 1975
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1975.tb00251.x
Subject(s) - business cycle , monte carlo method , economics , luck , econometrics , aggregate (composite) , series (stratigraphy) , mathematics , macroeconomics , statistics , paleontology , philosophy , materials science , theology , biology , composite material
NBER business“cycle” reference dates and aggregate economic time series are examined for evidence of regular cyclic behavior. A simple contingency table test is used on the reference dates, and aggregate series are fit with a second‐order autoregression. The results are negative. Apparently the business “cycle” is an optical illusion or, as Irving Fisher called it, a “Monte Carlo cycle.” These are the cycles superstitious gamblers believe govern their luck.