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Business cycles are a type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprises: a cycle consists of expansions occurring at about the same time in many economic activities, followed by similarly general recessions, contractions, and revivals which merge into the expansion ...
Real business-cycle theory (RBC theory) is a class of new classical macroeconomics models in which business-cycle fluctuations are accounted for by real (in contrast to nominal) shocks. [1] Unlike other leading theories of the business cycle, [ citation needed ] RBC theory sees business cycle fluctuations as the efficient response to exogenous ...
The multiplier–accelerator model (also known as Hansen–Samuelson model) is a macroeconomic model which analyzes the business cycle. [1] This model was developed by Paul Samuelson , who credited Alvin Hansen for the inspiration.
It combines aspects of the Harrod–Domar growth model with the Phillips curve to generate endogenous cycles in economic activity (output, unemployment and wages) unlike most modern macroeconomic models in which movements in economic aggregates are driven by exogenously assumed shocks. Since Goodwin's publication in 1967, the model has been ...
The Austrian business cycle theory (ABCT) is an economic theory developed by the Austrian School of economics seeking to explain how business cycles occur. The theory views business cycles as the consequence of excessive growth in bank credit due to artificially low interest rates set by a central bank or fractional reserve banks. [1]
The new neoclassical synthesis (NNS), which is occasionally referred as the New Consensus, is the fusion of the major, modern macroeconomic schools of thought – new classical macroeconomics/real business cycle theory and early New Keynesian economics – into a consensus view on the best way to explain short-run fluctuations in the economy.
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Lucas's model dominated new classical economic business cycle theory until 1982 when real business cycle theory, starting with Finn E. Kydland and Edward C. Prescott, [8] replaced Lucas's theory of a money driven business cycle with a strictly supply based model that used technology and other real shocks to explain fluctuations in output. [9]