The business cycle : theories and evidence : proceedings of the Sixteenth Annual Economic Policy Conference of the Federal Reserve Bank of St. Louis

These proceedings, from a conference held at the Federal Reserve Bank of St. Louis on October 17-18, 1991, attempted to layout what we currently know about aggregate economic fluctuations. Identifying what we know inevitably reveals what we do not know about such fluctuations as well. From the vantage point of where the conference's participants view our current understanding to be, these proceedings can be seen as suggesting an agenda for further research. The conference was divided into five sections. It began with the formu­ lation of an empirical definition of the "business cycle" and a recitation of the stylized facts that must be explained by any theory that purports to capture the business cycle's essence. After outlining the historical develop­ ment and key features of the current "theories" of business cycles, the conference evaluated these theories on the basis of their ability to explain the facts. Included in this evaluation was a discussion of whether (and how) the competing theories could be distinguished empirically. The conference then examined the implications for policy of what is known and not known about business cycles. A panel discussion closed the conference, high­ lighting important unresolved theoretical and empirical issues that should be taken up in future business cycle research. What Is a Business Cycle? Before gaining a genuine understanding of business cycles, economists must agree and be clear about what they mean when they refer to the cycle. This book presents current knowledge on aggregate economic fluctuations -- business cycles. The book begins with an empirical definition of the `business cycle'. After outlining the historical development and key features of the current theories of the business cycle, these theories are evaluated on the basis of their ability to explain the facts. Included in this evaluation is a review of whether and how the competing theories could be distinguished empirically. The book concludes by highlighting important theoretical and empirical issues for future business-cycle research. Contributors include: Victor Zarnowitz and Arnold Zellner/University of Chicago; Ben Bernanke and Alan Blinder/Princeton; Michael R. Darby/Ucla; Ray Fair/Yale; Benjamin Friedman and James Stock/Harvard; Herschel Grossman/Brown University; and David Laidler and Michael Parkin/University of Western Ontario Front Matter....Pages i-xxi Front Matter....Pages 1-1 What is a Business Cycle?....Pages 3-83 The Cycle Before New-Classical Economics....Pages 85-117 Front Matter....Pages 119-119 For a Return to Pragmatism....Pages 121-132 The Cowles Commission Approach, Real Business Cycle Theories, and New-Keynesian Economics....Pages 133-157 Front Matter....Pages 159-159 How Does it Matter?....Pages 161-185 Back Matter....Pages 187-209 Proceedings of the Sixteenth Annual Economic Policy Conference of the Federal Reserve Bank of St. Louis