Wang, Pengfei (contributor); Wen, Yi (contributor) - 2007 - Rev.
-444-8731. Email: yi.wen@stls.frb.org.
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1 Introduction
Business cycles and growth are undoubtedly the two most important issues in … the Keynesian IS-LM model (Hicks 1937). The modern
real business cycle (RBC) theory, developed by Kydland and Prescott … common driving force for growth and business
cycles, the RBC theory has not succeeded in ending the dichotomy.2 This is …