Creating Economic Model, 28 Steps

by Dr. Bob Reuschlein

#1 Bar chart from Ruth Sivard found, military vs manufacturing productivity

#2 Graph the bar chart

#3 Correlate raw data

#4 Drop one country and correlate again

#5 Weighted average three continents and correlate

#6 After perfect cross continent proof, look for long term model in leading economic country US 

#7 Graph economic growth rate plus military spending

#8 Recognize deficit offsets military spending to explain World War II

#9 Recognize Kondratiev Wave explains the fifties

#10 Recognize manufacturing productivity explains better than economic growth

#11 Look to establish parameters for long term US model

#12 Use a variety of multi year moving averages to locate peaks and troughs over time

#13 Use formula given by a friend when peak to trough and trough to peak matches that formula

#14 Know that the answer to all differential equations is a sine wave

#15 Compute amplitude of sine wave using peak and trough of economic growth wave

#16 Compute values each year and compare to actual values

#17 When annual comparisons show differences, compute running total of variations over time

#18 Note that running total approaches zero periodically

#19 Consult Encyclopedia Britannica on economic cycles

#20 Note that periodic perfection of running total error follows Juglar 8 to 10 year cycle

#21 Note that model drops to 7.0 lower rate during Great Depression

#22 Note that model drops 3.7 lower rate during seventies Oil Crisis

#23 Note that down periods perfect out at lower level every three years or so.

#24 Note that down periods just mentioned return to normal after about a decade

#25 Note that starting period 1920 to 1922 requires using a three year average for the 1921 year

#26 Note that 1939 to 1947 data gap fills smoothly with no productivity gain for the four war years and average productivity assumed for the years 1940, 1941, and 1946

#27 Note the linear reduction in total model volatility in six successive Juglar cycles from the twenties to the eighties.

#28 Note that model was extended for another thirteen years with similar accuracy

Full eleven page explanation of this process including numbers used:

https://www.academia.edu/7632773/PROOF_of_Peace_Economics_11_pages_1986