Stock Markets and Business Cycles Timing in Capitalist Economies -USA Economy as Example-

Abstract

This paper examines the relationship between the real economy and the capital markets. The main objective of this study is to analyze the nature of the relationship between the economic activity and the stock market index fluctuations in the USA during the period 1970-2017. The relationship between capital market fluctuations and business cycles is measured and analyzed modeling and timing of these cycles by the Bry and Bouchan method (1971), and measuring their co-movements using cycles synchronization. One of the most important results is that extreme economic cycle volatility has become a distinguishing feature of the capitalist system. It is possible to observe the intensive succession of cycles, especially those characterizing the U.S.A. economy, their severity is not high. The period of stagnation and recession has declined. The capital market index cycle is larger than the economic cycle, indicating the growing gap between the real and financial economies