Home » Eng Finance » S » Sunspot theory

Sunspot theory

A theory that predicts that economic activity can be coordinated with events outside the economic system. Sunspot theory was originally proposed by William Jevons (1835-1882), who provided evidence that economic cycles could be linked to the regular occurrence of solar flares or spots. Sunspot theory now refers to the proposition that it is possible for the economic activity of individuals to be endogenously coordinated and hence appear correlated with some outside activity (such as a sunspot) that has no direct real economic effect.

Reference: Oxford Press Dictonary of Economics, 5th edt.