THE LIMITS OF BUSINESS-CYCLE RESEARCH - ASSESSING THE REAL BUSINESS-CYCLE MODEL

The real business cycle model dominates business cycle research in the new classical tradition. Typically, real business cycle modellers bot h offer the bold conjecture that business cycles are equilibrium pheno mena driven by technology shocks and also novel strategies for assessi ng the success of the model This article critically examines the real business model and the assessment strategy, surveys the literature sup porting and opposing the model, and evaluates the evidence on the empi rical success of the model It argues that, on the preponderance of the evidence, the real business cycle model is refuted.