World-System (1460-1540): The WL16 Model

The Long Sixteenth Century Model (WL16) looks at the first Volume of Immanuel Wallerstein's World-System I, Capitalist Agriculture and the Origins of the European World-Economy. The model uses the Maddison Data Base and global temperature data from the IPCC to estimate a state space model (see the Measurement Matrix, below). The results are presented in the graphic above.

The first state variable, W1=(Q+N-T) is an Environmental Controller (Error Correcting Controller, ECC). The first sate variable in most 20th Century models (here) are growth components weighting all the available indicators positively. In the Long 16th Century, growth was controlled by global temperature.

The second state variable, W2=(Q+T) captures overall growth and eventual decline in production (Q) and global temperature (T). The decline starts in about 1575.

The decline in (Q+T) has been conventional called the Little Ice Age (see the graphic above from Waldinger, 2022).

The third state variable, W2=(Q-N), is the Malthusian ECC which is cyclical and hits the Malthusian crisis low point in 1600, right at the bottom of the Little Ice Age.

You can run the WL16 model here. The model is unstable due to the unstable (Q+T) component. Instructions for stabilizing the model are contained within the code. Boiler Plate can be found here.

Notes

The three state variables presented at the beginning of this pose were constructed from standardized data using the following Principal Components measurement matrix.

For more technical information about Dynamic Component Models (DCMS) read the Boiler Plate.

 

Boiler Plate

 

Notes

 Akaike Information Criterion (AIC) for alternative models shows that the RW model is a strong competitor for US Growth, at least in the short-term.

State Space Model Estimation

The Measurement Matrix for the state space models was constructed using Principal Components Analysis with standardized data from the World Development Indicators. The statistical analysis was conducted in an extension of the dse package. The package is currently supported by an online portal (here) and can be downloaded, with the R-programming language, for any personal computer here. Code for the state space Dynamic Component models (DCMs) is available on my Google drive (here) and referenced in each post.

Atlanta Fed Economy Now

My approach to forecasting is similar to the EconomyNow model used by the Atlanta Federal Reserve. Since the new Republican Administration is signaling that they would like to eliminate the Federal Reserve, the app might well not be available in the future.

While the app is still available, there have been some interesting developments. In earlier forecasts, the Atlanta Fed was showing GDP growth predictions outside the Blue Chip Consensus. Right now, after unorthodox economic policies from the Trump II Administration, the EconomyNow model is predicting a drastic drop in GDP (The Financial Forecast Center is only predicting a slight drop here).

Climate Change

Another comparison for what I have presented above are the IPCC Emission Scenarios. These scenarios are for the World System. Needless to say, (1) the new Right-Wing Republican administration plans on withdrawing the US from all attempts to study or ameliorate Climate Change and (2) the IPCC does not produce any RW modes for the World System (but seem my forecasts here).

The World-System (1460-1540): About

 

The Long 16th Century (1460-1540) was a period of history used by Ferdinand Braudel in his two volume History of the Mediterranean World.

On the World History Timeline (above), it covered the transition from Feudalism to Capitalism. The Takeoff associated with GDP in the Industrial Revolution was in the future.

I have developed state space models for the period based on the Maddison Historical Statistics. The models, written in the R programming language using the dse package are available here and can be run in the Snippets browser here.