Bring out the salient features of real business cycle models. What are its implications?
Introduction Real Business Cycle (RBC) models are a major development in macroeconomic theory. Introduced in the 1980s by economists like Finn Kydland and Edward Prescott, these models attempt to explain economic fluctuations based on real (not monetary) shocks, especially productivity changes. Unlike Keynesian models that emphasize demand-side factors, RBC theory focuses on supply-side elements and […]
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