ABSTRACT
Business cycle or the trade cycle has been experienced by all industrial countries since the nineteenth century. While governments may have the greatest difficulty in overcoming the effects of major structural changes in the economy, they should be able at least to mitigate cyclical fluctuations by means of suitable monetary and fiscal policies. A perfectly regular cycle would carry the economy from "peak" to "trough" and back again with uniform frequency and amplitude. The ability of stochastic models to produce lifelike cycles does not rule out the possibility that past fluctuations may, in fact, have been generated endogenously. The particular interaction on which several "endogenous" theories have been based is that between the Multiplier and the Accelerator. The original Multiplier-Accelerator interaction can thus be modified in various ways to achieve greater realism, albeit at the cost of increased complexity.
