ABSTRACT
Business cycle theory presents an intellectual, political and practical challenge to the preoccupation with general equilibrium that has characterised the mainstream approach to economic theory since the end of the nineteenth century. The business cycle is a method of economic analysis that challenged general equilibrium analysis in the twentieth century. The business cycle theory is more than a way of dealing with economic dynamics, as suggested by the traditional approach to the subject, from Harrod to Dynamic Stochastic General Equilibrium. The traditional approach to economic analysis that Cambridge bequeathed to the twentieth century, and in which Keynes was brought up, was partial equilibrium. Keynes argues that the key variable in the business cycle is what he called the 'marginal efficiency of capital'. Keynes's discussion of the business cycle evoked particular criticism from Hyman P. Minsky, and is the point at which at least one distinguished post-Keynesian has sought to exclude business cycle theory from post-Keynesian economics.
