ABSTRACT
Cyclical fluctuation is an essential feature of economic growth. There always exists an instantaneous equilibrium value in any cyclical fluctuation. The instantaneous equilibrium value of the economic cycle depends on not only internal structural factors, but also exogenous variables such as fiscal expenditure and export. The equilibrium evolves as these factors change. The dynamic Solow model is a model of endogenous cyclical fluctuations, and its stable equilibrium growth process is consistent with the dynamic equilibrium growth process of the economic cycle. Keynesian non-equilibrium growth theory and neoclassical equilibrium growth theory reflect cyclical fluctuations and dynamic equilibrium of the growth process respectively. In the real economy, shorter-term fluctuation always moves around longer-term fluctuation and takes longer-term fluctuation as its dynamic equilibrium.
