IDEAS home Printed from https://ideas.repec.org/h/spr/spshcp/978-3-031-58580-7_16.html
   My bibliography  Save this book chapter

The Real Business Cycles Approach

In: Competing Schools of Economic Thought

Author

Listed:
  • Lefteris Tsoulfidis

    (University of Macedonia)

Abstract

Until now, we have explored how New Classical (hereafter, NC) economics has reinstated and emphasized the concept of cyclical fluctuations, grounded in the assumption of continuous market clearing across all markets and the rational expectation hypothesis characterizing the behavior of economic agents. According to NC economists, the primary causes of fluctuations in real GDP are attributed to insufficient information regarding the distinction between relative prices and the general price level, along with monetary shocks. This explanation for the origin of business fluctuations not only challenged Keynesian orthodoxy but also laid the groundwork for the emergence of Real Business Cycles (RBC) and New Keynesian economics. This chapter commences with a historical overview of the discourse on business cycles and subsequently delves into the key characteristics of the RBC approach. The discussion then turns to the exploration of the causes of business cycles, differentiating between real and monetary factors, and the separation of cycles from growth (trend). A brief overview of RBC simulation models is presented, followed by an examination of the policy implications associated with RBC. The chapter concludes with a summary and critical reflections on this approach that garnered significant attention, at least until the onset of the post-2007 crisis.

Suggested Citation

  • Lefteris Tsoulfidis, 2024. "The Real Business Cycles Approach," Springer Studies in the History of Economic Thought, in: Competing Schools of Economic Thought, edition 2, chapter 0, pages 383-402, Springer.
  • Handle: RePEc:spr:spshcp:978-3-031-58580-7_16
    DOI: 10.1007/978-3-031-58580-7_16
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:spshcp:978-3-031-58580-7_16. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.