Business Cycles

The confidence in the market mechanisms for clearing all markets splits the economic profession. In this book, not only the existing business cycle literature is examined within the framework of economic stability, but also the market structure and the interaction of markets are analysed in their impact on the business cycle. Nominal rigidities are shown to exist in the cases of monopoly, monopolistic competition with menu costs. For the case of oligopoly, a new approach is presented. Endogenous cycles are derived for a monopoly model. The interaction of a consumption goods sector and an investment goods sector is dealt with. Substitution between labour and capital with the sector and between the two sectors are identified as the main economic reasons for economic fluctuations. Emphasis is laid on the economic interpretation of the mostly mathematical analysis of optimal growth and overlapping-generations models and a new approach of partial equilibrium.