Andy W. Mullineux*, David G. Dickinson

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

11 Citations (Scopus)


ABSTRACT. This paper surveys equilibrium business cycles (EBC) theory, which has dominated the business cycle literature since the mid 1970s. It focuses primarily on the real business cycle (RBC) literature the origin of which is traced to the monetary equilibrium business cycle (MBC) model developed by Lucas (1975). RBC and MBC models are themselves related to a wider class of linear stochastic business cycle models which, following Frisch (1933), view the cycle as the result of the propagation, by the economic system, of a series of random shocks. The MBC approach highlighted the importance of monetary shocks but its failure to adequately explain observed fluctuations provided the impetus to the development of the RBC approach, which emphasises the importance of real shocks. This paper also appraises the empirical support for the RBC approach and finds it less than compelling. Given the failure of Keynesian, and equilibrium linear stochastic business cycle models to fully explain economic fluctuations, the Frischian approach to business cycle modelling is called into question. Developments to existing models, which may help to clarify our understanding of business cycle behaviour, are discussed with a view to setting out a research agenda for the 1990s and beyond.

Original languageEnglish
Pages (from-to)321-358
Number of pages38
JournalJournal of Economic Surveys
Issue number4
Publication statusPublished - 1 Jan 1992


  • Equilibrium Business Cycle
  • Linear Stochastic Models
  • Neoclassical Growth
  • New‐Classical Economics
  • New‐Keynesian Economics
  • Real Business Cycles

ASJC Scopus subject areas

  • Economics and Econometrics


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