The ABC's of the real business cycle

Abstract

The real business cycle approach to business cycle theory is viable and worthy of extended research. However, it does not resolve the dilemma facing business cycle theorists in coming up with one true explanation of the cycle. Throughout my research paper, I have clearly defined its shortcomings in terms of the non-recognition of money and a refusal to incorporate aggregate demand into the model. As a new theory, my purpose was to gain an enlightened view of what many feel is a revolutionary new way of business cycle thinking. I started with an explanation of what the theory holds as its premise and detailed the theory in action with the use of a simple real cycle model. My research was confined mainly to current economic periodicals along with a few books by real business cycle proponents. While I am a novice in the field of business cycle studies, I feel my paper offers a generous overview of the real business cycle and is accessible to both the layman and expert as well. Hopefully, the reader will be intrigued by my paper and will find it to be an adequate discussion of business cycle analysis.