This book is a comparative evaluation of the main theories of business cycles. The book begins with a brief statistical description of US business cycles and proposes criteria, in Part One, for the evaluation of the theories based on the observed empirical regularities. Part Two is a full exposition of the new Classical theories of business cycles, the Lucas monetary misperceptions approach, as well as the so-called real business cycle approach based on outside shocks to the economy. This is followed by a detailed treatment of the new Keynesian business theory based on price rigidities and...