A Cardinal Utility Approach to the Theory of the Business Cycle
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We use a cardinal utility approach to depict the influence of a business climate on individual producers of investment and consumption goods. Generated by the total of producers, this climate alters its strength and direction in the course of time thus modifying the behaviour of each producer. Cumulative effects, errors of optimism and pessimism, and disproportions of investment goods and consumption goods production may occur. Assuming reasonable values for the parameters, we obtain an asymptotically and structurally stable business cycle.
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