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This brief essay is intended to provide readers with an introduction to the real business cycle approach to business fluctuations. It discusses the basic real business cycle framework; economic growth and business cycles; real business cycles and the 1954–1985 U.S. economy; government policies and suboptimal equilibrium; and the real business cycle research agenda. An appendix presents a more technical summary of the basic neoclassical model presented in the paper.
Charles I. Plosser (Tue,) studied this question.