Real business cycle theory: What have we learned?

• Edward C. Prescott ^[1]
  1. [1] University of Minnesota

     University of Minnesota

     City of Minneapolis, Estados Unidos

     
• Localización: Revista de análisis económico, ISSN-e 0718-8870, ISSN 0716-5927, Vol. 6, Nº 2, 1991, págs. 3-19
• Idioma: español
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• Resumen

  • Real business-cvcle theory is the application of general equilibrium theory to the quantitatiy analysis of businnes-cycle fluctuation. The theory is real in the sense that there really is something there. In this review article I document that in applying established theory to quantitatively address business-cycle questions, a lot has been learned. We learned that business cycles are nor deviations from this established theory. but rather are just what this theory predicts. In particular, we learned that business cycles are induced by hight persistent changes in those factors that determine the steady-state level of the deterministic growth model. Non persistent shocks do not induce fluctuations of the business-cycle variety. In this article I also discuss some methodological issues concerning judging and testing business cycle models.