REAL BUSINESS-CYCLE MODELS AND MONEY - A SURVEY OF THEORIES AND STYLIZED PACTS

This article presents a survey of real business cycle theory, with spe cial attention to the role of money. This role is mainly associated wi th cash-in-advance constraints, liquidity effects and aspects of finan cial intermediation. Apart from reviewing the literature, stylized fac ts about the comovements of output and prices versus monetary aggregat es and interest rates over the cycle are assembled and discussed for e ight industrial countries, including the GS-countries, Denmark, Belgiu m and the Netherlands. The paper concludes that further developments i n monetary real business cycle theory could benefit from taking into a ccount a broader set of stylized facts about prices than has been done thus far, as well as from introducing non-Walrasian elements and endo genizing monetary policy.