Real Business Cycle Theory - procyclicality
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I don't understand the RBC theory in terms of procyclicality of prices and procyclicality of money supply.
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According to real business cycle theory (RBCT), the business cycle is caused by random fluctuations in productivity. Unlike other leading theories of the business cycle, it sees recessions and booms as maximally optimal responses to these changes. That is, RBC theorists argue that at any point in time, the level of national ...
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