Real Business Cycles: A New Keynesian Perspective
This paper is a critique of the latest new classical theory of economic fluctuations. According to this theory, the business cycle is the natural and efficient response of the economy to exogenous changes in the available production technology. This paper discusses several versions of this theory and argues that this line of research is unlikely to yield an empirically plausible explanation of observed economic fluctuations.
Published: Journal of Economic Perspectives, Vol. 3, No. 3, pp. 79-90, (Summer 1989).