PIGOU AND MODERN BUSINESS-CYCLE THEORY

It is contended that Pigou's scientific 'vision' in Industrial Fluctua tions (1927) has much in common with that of modern business cycle the ory. Both stressed, though to different degrees, the centrality of com petition and rationality. However, Pigou gave much more emphasis than does modern theory to: multiplicity of causes; psychology; amplitude; interaction among impulses; non-perfect competition; labour market ins titutions; externalities. Thus his work may have some lessons for mode rn economists in terms of the scope and method of business cycle theor y.