Harmonic Analysis: The Aplication of 'Theoretical Cycles' to the Economic Analysis
The Fourier transformation of a stationary series allows to look at the different frequency components of the series. By isolating frequency components in a group of series, the possibility of the relationships between the series varying with frequency can be also analysed. The aim of this paper is to present evidence on the validity of the application of the spectral analysis to economic phenomena. The postulates of the quantity theory of money provide the basic framework for the application of this method to quantify economic theories. The period analysed covers a great deal of the capitalistic stage, and it is focused on three European countries: Spain, France and Great Britain. For the purpose of this study, this period was selected because it presents very different phases, since throughout this long time, the classic gold-standard alternated with a fiduciary system as a result of the changes in institutional policy. The main conclusion of this work is that the values of the parameters obtained from theoretical cycles -that result of the decomposition based on this analysis- are significantly closer to those postulated by quantity theory than those obtained from the time series data or from subsequent empirical cycles.
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