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"The Analysis of Business Cycles: The Problem and the Approach" [2004] ELECD 194; in Minsky, P. Hyman; Papadimitriou, B. Dimitri (eds), "Induced Investment and Business Cycles" (Edward Elgar Publishing, 2004)

Book Title: Induced Investment and Business Cycles

Editor(s): Minsky, P. Hyman; Papadimitriou, B. Dimitri

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843762164

Section: Chapter 1

Section Title: The Analysis of Business Cycles: The Problem and the Approach

Number of pages: 19

Extract:

1. The analysis of business cycles: the
problem and the approach
Paraphrasing Voltaire, we can assert that if business cycles did not exist, the
economic theorist would have invented them. For if we look at the problem
of business cycles, without any doctrinaire bias, it seems obvious that in this
branch of economics a natural connection occurs between the often too
separate compartments of economic analysis: between the `monetary' and
the so-called real phenomena. Therefore, a theory of business cycles, to be
consistent with the observable material and the inherited doctrines, should
be a blend of the analytical material which deals with the interrelations
among a few broad aggregates ­ which traditionally has been the approach
of monetary theory ­ and the analytical material which deals with the
behavior of individual economic units and of particular markets ­ which
has been the sphere of price and distribution theory. This thesis can be
interpreted as an attempt to construct such an eclectic business cycle theory
by utilizing a number of elements drawn from inherited economic analysis.
To be complete such an attempt would have to explore such purely theor-
etical material as the relation between macro and micro analysis, between
partial and general equilibrium analysis and between monetary and real
phenomena, as all of these separate pieces of economic theory have to be
used in an analysis of business cycles. That task is both too big and
too general. What will be attempted here is to try to develop a technique
of business ...