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Theories of Business cycles - Coggle Diagram
Theories of Business cycles
Keynesian
Excessive optimism or pessimism
New keynesians
Input prices other than wages also are slow to move downward
Contractions can persist coz wages are slow to move downwards
Neoclassical
BCs are temp
Driven by tech
Rapid adj of wages and other input prices lead to full-empl equilibrium
Monetarists
inapp changes in money supp growth
Money supp growth maintained at mod and predictable rate to support the growth of real GDP
Austrian-school
BCs are initiated by govt interventions
Govt drives Int rates to atificially low levels
Real business cycle theory
Extrenal shocks
Changes in Tech
Policy makers should not intervene in BCs