“That wine is not made in a day has long been recognized by economists. ” With that declaration in Kydland and Prescott’s “Time to Build and Aggregate Fluctuations” (1982 : 1345), * the real business cycle school was born. Like wine, a school of thought is not made in a day. Only after it has matured is it possible to judge whether it is good and to separate the palatable portions from the dregs. The literature on real business cycle models has now sufficiently aged, ready for the connoisseurs to pass judgment.
To facilitate those judgments, we have collected together in this volume thirty-one previously published articles relevant to real business cycle models. While there has been no shortage of commentaries on the real business cycle program, the commentaries have been widely scattered and have often focused on narrow aspects of the models or represented partisan positions. Until now, there has not been an easily accessible means for students of business cycles to assess the real business cycle program on the basis of the original sources from the perspectives of the critics as well as the proponents. To date, the most systematic accounts of the real business cycle program are found in the works of active proponents, particularly in Thomas Cooley’s (ed.) Frontiers of Business Cycle Research (1995b), and in the programmatic manifestoes of Kydland and Prescott (1991 , 1996 ). Yet the critical literature is burgeoning.
The present volume brings together the important articles which make the case for and against real business cycle models. The articles begin with the classics of the real business cycle school, starting with Kydland and Prescott’s (1982 ) seminal model. In addition, we include articles on the methodology of real business cycle models, particular aspects of the program (e.g., calibration, the measurement of technology shocks, methods of
* Throughout Chapters 1 and 2, the bold numbers in the square brackets within the text references refer to later chapters in this volume. However, all page numbers in these references are the page numbers from the original article.