Introduction

Abstract

The fundamental nature of economic fluctuations is a point of obvious importance, but also one of the least understood questions in economics. Under dispute are not details, but the basic mechanisms underlying the business cycle phenomenon. Are these fluctuations of a sufficiently regular period to be called cycles, or rather irregular ups and downs? Are these movements the outcome of an endogenous process, or simply caused by exogenous shocks, such as import price increases, changes in foreign demand, switches of policy? Are the unpleasant concomitants of business cycles, like unemployment, a sign of coordination failures of a market economy, or, quite the reverse, optimal responses of economic agents to exogenous shocks?