Dennis Robertson and the Real Business Cycle

In the course of re-reading DHR’s writings for this chapter, I came to believe that in his first major academic publication, the Study of Industrial Fluctuation (1915), Robertson had developed entirely on his own a clearly recognisable version of a Real Business Cycle theory. In Robertson’s basic model, incorporating single-person entrepreneurial firms, e. g. farmers, technological shocks, notably inventions, shift intertemporal production/consumption opportunity sets, and cause producers (rationally) to vary their intertemporal supply of effort/labour. There are no market failures, no money, no fluctuations in aggregate demand in DHR’s basic, stripped-down model. Of course, he subsequently extends his model to take account of the distinction between employers and employees, with the nominal wage rate of the latter being, in practice, slow to adjust; and he also then introduces, and discusses, monetary disturbances.