ABSTRACT
Based on the cyclical theory of economic growth, this chapter builds a simple cyclical model from the perspective of demand determination. The model uses 16 endogenous variables, including GDP, investment, consumption, export and import. It is further deconstructed into five sub-models: the short-term, mid-term, mid-to-long-term and long-term fluctuation models, as well as the model of dynamic equilibrium value. According to our simulation, the predicted values of all but the short-term sub-models turn out to be highly consistent with the actual values. That validates the effectiveness of our cyclical model of economic growth in simulating the cyclical fluctuation of selected endogenous variables within the sample interval, and in predicting the trend of their dynamic equilibrium values. The simulative prediction of China’s economic cycle in Chapter 11 is the result of the application of this cyclical model.
