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Can Herding Explain Cyclic Co-Movement?

Author

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  • BERND SÜSSMUTH

    (Department of Economics, University of Munich, Ludwigstr. 28/RG, D-80539 Munich, Germany)

Abstract

Recently, co-movement and the synchronised pattern of business cycles on various scales (sectoral, national, etc.) attract growing attention among macroeconomists. This paper integrates qualitative implications of a simple endogenously-timed herding model's logic into an investment cycle model. It is shown that this integrated argumentation is generally applicable for models that generate endogenous cyclic dynamics to explain the coupling of frequencies. Informational externalities induced by herding on the micro-level therefore seem to be an adequate argumentation behind business cycle models that capture co-movement by means of the so-called "mode-locking" mechanism.

Suggested Citation

  • Bernd Süssmuth, 2002. "Can Herding Explain Cyclic Co-Movement?," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 33-51.
    • Handle: RePEc:wsi:igtrxx:v:04:y:2002:i:01:n:s0219198902000537
    DOI: 10.1142/S0219198902000537
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    Cited by:

    1. Larry Filer & David D. Selover, 2014. "Why Can Weak Linkages Cause International Stock Market Synchronization? The Mode-Locking Effect," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(3), pages 20-42, July.

    More about this item

    Keywords

    Herding; Investment Cycles; Nonlinear Entrainment;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C0 - Mathematical and Quantitative Methods - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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