This paper develops a simple model, which shows how economic fluctuations can stimulate growth. It is shown that firms tend to invest more in productivity growth during recessions, since the opportunity cost (in terms of forgone profits) of investing capital or labour resources in technological...

This paper reviews the recent literature on the interactions between business cycles and growth. It focuses on the causality from cycles to growth, but also deals to some extent with the reverse causality. It discusses both "Keynesian" and "Schumpeterian" theories of cycles and growth. Copyright...