This paper examines two aspects of Hayek's business cycle theory in the early 1930s: his methodological approach to the analysis of the cycle, and his substantive analysis of the role of changes in the 'structure of production' over the course of the cycle. The examination of the first aspect is developed by means of a comparison between Hayek's approach and those subsequently adopted by, first, Keynes and, second, Robert Lucas. The second aspect is investigated with the help of a formal example of the sort of 'structural transition' which Hayek envisaged: this is designed to shed some light on the question of which aspects of Sraffa's critique of Hayek are valid and which miss the mark. Copyright 1994 by Oxford University Press.
