How to Identify Bilateral Geopolitical Cycles?

In previous research of mine, I proposed a simple and efficient method to identify what I called the geopolitical turning points — unexpected change in bilateral geopolitical relationships. You can the paper by following this link:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5366829

Another way to proceed is to identify cycles in bilateral geopolitical relationships. To achieve this, I will use the BB algorithm to validate the potential candidates for local maxima or local minima. These local values can be then qualified as Geopolitical Turning Points. Recent examples of the implementation of this procedure to date business cycles can be found here:

Aizenman, Joshua and Ito, Hiro and Park, Donghyun and Saadaoui, Jamel and Uddin, Gazi Salah, Global Shocks, Institutional Development, and Trade Restrictions:

What Can We Learn from Crises and Recoveries Between 1990 and 2022? (May 2025). NBER Working Paper No. w33757, Available at SSRN: https://ssrn.com/abstract=5241563

and monetary cycles:

Forbes, Kristin J., Ha, Jongrim and Kose, M. Ayhan, Rate Cycles (July 15, 2024). MIT Sloan Research Paper No. 7185-24, Available at SSRN: https://dx.doi.org/10.2139/ssrn.5063421

When we apply this algorithm to the series of geopolitical relationships between China and the US, we obtain the following Geopolitical Cycles:

The Stata code is given for pedagogical purposes:

cd C:\Users\jamel\Dropbox\stata\sbbq

use PRI_update.dta, replace

des

tsset

// Translate standard quarterly default into monthly
sbbq USA, w(6) p(6) cycle(15)

egen min_USA = min(USA-1)

list Period USA_point if inlist(USA_point,1,-1)

tsline USA || ///
        pcspike min_USA Period USA Period if USA_point==1 || ///
        pcspike min_USA Period USA Period if USA_point==-1, ///
        lpattern(dash) leg(order(2 "Peaks" 3 "Troughs")) ///
        ti("Geopolitical Turning Points in USA-China Geopolitical relations") yline(0) graphregion(margin(r=10))

That’s all for today. Keep pushing.