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The Time-to-Build Tradition in Business Cycle Modelling

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  • N. Dharmaraj
  • K. Vela Velupillai

Abstract

An important frontier of business cycle theorising is the 'time-to-build' tradition that lies at the heart of Real Business Cycle theory. Kydland and Prescott (1982) did not acknowledge the rich tradition of 'time-to-build' business cycle theorising - except in a passing, non-scholarly, non-specific, reference to Böhm-Bawerk's classic on Capital Theory (Böhm-Bawerk [1899]), which did not, in any case, address cycle theoretic issues. The notion of ‘time-to-build’ is intrinsic to any process oriented production theory which is incorporated in a macrodynamic model. We provide an overview of this tradition, focusing on some of the central business cycle classics, and suggest that the Neo-Austrian revival should be placed in this class of dynamic macroeconomics, albeit ‘traverse dynamics’ is itself to be considered as a fluctuating path from one equilibrium to another.

Suggested Citation

  • N. Dharmaraj & K. Vela Velupillai, 2011. "The Time-to-Build Tradition in Business Cycle Modelling," ASSRU Discussion Papers 1109, ASSRU - Algorithmic Social Science Research Unit.
  • Handle: RePEc:trn:utwpas:1109
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    File URL: http://www.assru.economia.unitn.it/files/DP_09_2011.pdf
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    1. Amendola, Mario & Gaffard, Jean-Luc, 1998. "Out of Equilibrium," OUP Catalogue, Oxford University Press, number 9780198293804.
    2. Thomas Mayer, 1959. "Plant and Equiptment Lead Times," The Journal of Business, University of Chicago Press, vol. 33, pages 127-127.
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    Cited by:

    1. K. Vela Velupillai, 2011. "Remembering Clower," ASSRU Discussion Papers 1121, ASSRU - Algorithmic Social Science Research Unit.

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