Foundations of Business Cycle Research Volume II (original) (raw)

Foundations of Business Cycle Research, 2009

Abstract

Abstract: The subject matter of conventional macroeconomics is strictly dichotomized: separate macroeconomic theories are developed for the long run and for the short run. In long-run macroeconomics the economy is analyzed as if relative prices are fully adjusted to their long-run equilibrium values in each period, the fundamentals of the economy such as preferences and technology evolve smoothly and predictably, and expectations are correct all the time. Macroeconomics for the short run is about understanding the annual or ...

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