A New Look at Some Old Endogeneous Cycle Theories
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In chapter one we mentioned that there are two broad approaches to business cycle theory — the endogenous cycle theories and the exogenous shock theories. In this chapter we shall use the concepts and techniques of the previous chapter to place a class of endogenous cycle theories into a unified mathematical framework. In particular we shall be considering theories whose basis is in the dynamics of the real sector. This emphasis in no way indicates a belief that these theories are the unique or most satisfactory explanation of the business cycle. Our choice is dictated partly by the fact that these theories provide a well recognized body of economic knowledge which can benefit from a unified viewpoint and partly by the fact that they are still seen as the most representative of the endogenous cycle theories.
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