Chapter 5Some Skeptical Observations on Real Business Cycle Theory*
Federal Reserve Bank of Minneapolis Quarterly Review 10(4), Fall 1986, pp. 23-27.
The increasing ascendancy of real business cycle theories of various stripes, with their common view that the economy is best modeled as a floating Walrasian equilibrium, buffeted by productivity shocks, is indicative of the depths of the divisions separating academic macroeconomists. These theories deny propositions thought self-evident by many academic macroeconomists and all of those involved in forecasting and controlling the economy on a day-to-day basis. They assert that ...
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