Empirical indication of economic long waves in aggregate production

Two series of data covering more than 160 years of Danish economic history are investigated by means of spectral analysis and transfer function identification. The results give evidence to the existence of a 50-60 year long wave in aggregate production. To obtain stationarity, a logarithmic transformation of the data must be followed by elimination of a second order polynomial trend. This indicates that the economic development in average has been faster than exponential and points to the significance of higher order positive feedback mechanisms. Peaks of Gross Domestic Product (GDP) in current prices are found to lag peaks of GDP in fixed prices by typically 10 years. This implies that the inflationary pressure generated during the final stages of an upswing continues for about 10 years into the subsequent stagnation period.