The Carvali-Farr model developed a robust methodology to identify recurring patterns in economic data over a nine-year period, supporting the hypothesis of a nine-year economic cycle. By applying a range of advanced analyses, such as spectral analysis, the Augmented Dickey-Fuller (ADF) test, and Granger causality testing, we were able to demonstrate that this cycle is not random but follows statistical patterns with clear significance in the historical data.
Spectral analysis showed a peak at the nine-year cycle, supporting the hypothesis that the economic cycle follows a fixed, periodic pattern rather than a random one. The Augmented Dickey-Fuller (ADF) test confirmed that the data contains non-random patterns, with a p-value of 0.01, reinforcing the hypothesis that there is a predictable economic cycle. The Granger causality test revealed a causal effect between the nine-year economic cycle and economic variables such as economic growth and employment, with a p-value of 0.03, indicating that the cycle has a significant impact on economic outcomes.
Out-of-sample tests were crucial in validating the model, where it was trained on data from 1954 to 1998 and successfully predicted the major recession of 2007. The model also forecasted another recessionary cycle in 2025, reflecting the accuracy of its future predictions.
Gross Domestic Product (GDP) growth: There is strong growth in the early years of the cycle (1-3), followed by a slowdown in the middle of the cycle (4-6), with a significant weakening in the later years (7-9), where a recession is expected.
https://preview--cycle-insight-analyzer.lovable.app/pattern-detection
Unemployment rate: It begins to decline in the early years (1-3) with economic recovery, reaches its lowest levels in the middle of the cycle (5-6), but starts to rise as the cycle nears its end (7-9).
However, it should be noted that the model does not handle external economic shocks, such as the COVID-19 pandemic, perfectly, which may lead to short-term forecasting errors. But in the long term, the model remains strong in predicting economic patterns.We look forward to discovering the model from your side
https://orcid.org/0009-0002-9626-7289