The True Cause of Business Cycle
Cause and impulse are different. Cause creates an economic mechanism in which impulses propagate effect. If we remove cause, impulses propagate nothing. In credit economy, I derive an economic mechanism from economic agents’ budget constraint interactively in which effects arising from impulses are comovement. This economic mechanism does not exist in noncredit economy while all impulses are active. Thus, loan is the true cause of business cycle. Business cycle is inherent in credit economy. If we remove loan from the world we live in, we eliminate business cycle completely and permanently.
Arnold, Lutz G. 2002. Business Cycle Theory. Oxford University Press.
Frisch, R. 1933. “Propagation Problems and Impulse Problems in Dynamic Economics,” In Economics Essay in Honor of Gustav Cassel. London: Allen and Unwin, pp. 171205.
Fuhrer, J and Schuh, S. 1998. “Beyond Shocks: What Causes Business Cycles? An Overview,” New England Economic Review, pp. 324.
Friedrich A, Hayek. Monetary Theory and the Trade Cycle, reprinted in Prices and Production and Other Works: F. A. Hayek on Money, the Business Cycle, and the Gold Standard, edited by Joseph T. Salerno, Ludwig von Mises Institute.
Friedman, M. The Methodology of Positive Economics, Essay in Positive Economics, 1953, University of Chicago press.
Kiyotaki, N and Moore, J. 1997. “Credit Cycle,” Journal of Political Economy, pp.211248
Kydland, F and Prescott, E. 1982. “Time to Build and Aggregate Fluctuations,” Econometrica, pp. 13451370.
Lucas, R. E., Jr. 1977. “Understanding Business Cycle,” in K. Brunner and A. Meltzer (eds), Stabilization of the Domestic and International Economy. Amsterdam: NorthHolland, pp. 729.
Lucas, R. E., Jr., 1980. “Methods and Problems Business Cycle Theory,” Journal of Money, Credit, and Banking, pp. 696715..
Lucas, R. E., Jr. and Sargent, T. J. 1978. “After Keynesian Macroeconomics,” InAfter the Phillips Curve: Persistence of High Inflation and High Unemployment (Conference Series 19) Federal Reserve Bank of Bostnon, pp. 4972.
Patinkin, Don. Keynes’ Monetary Thought, 1976, Duke University press.
Rebelo, S. 2005. “Real Business Cycle Models: Past, Present, and Future,” www.kellogg.northwestern.edu/faculty/rebelo/htn/ rbc.pdf
Sims, C. A. 1972. “Money, Income and Causality,” American Economic Review, pp. 540552.
Ting, Chao Chiung. “The Optimal Size of the Firm and Growth Theory,” European Journal of Economics, Finance and Administrative Science, 2010, Issue 25, pp. 2528.
Victoria, I. and Dvaid, S. 2010. “Loan Syndication and Credit Cycle,” American Economic Review, pp.5761.
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License (Creative Commons Attribution License 3.0 - CC BY 3.0) that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
email@example.com, www.cbuni.cz, ojs.journals.cz