ABSTRACT
The character of this essay is to a great extent different from that of the preceding ones. In the latter we frequently used simplified models, but only in order to solve some basic problems in their pure form, returning afterwards to the complexities of the real world. Here, however, we confine ourselves to the consideration of the business cycle only under simplifying assumptions, some of which may seem drastic. This is partly due to the peculiar character of the subject. The business cycle as such exists only as a tendency which in conjunction with what we call more or less vaguely “secular trend,” “structural changes,” etc., creates the extremely complex dynamic process we observe in the real world. Thus to pass from a simplified model to reality is to undertake a thorough analysis of this process as a whole, which is clearly beyond the scope of this essay.
