For Keynesian and monetarist economists the recessions indicate the failure of some markets to clear. There is another group of economists who claim that the recession is inside the structure of the economy, is an inextricable part of all economies. These economists introduced the real business cycles models (RBC models) which support that the existence of recession periods is the most efficient operation of the economy. The most popular economists of them are Finn Kydland and Edward Prescott (Chicago school) who were the winner of the 2004 Nobel Memorial Price in Economics for their contribution in the understanding of the business cycles(1982). This theory supports that the fluctuations are the results of real shocks in the economy like technological shocks .RBC models are based on supply shocks rather than demand shocks(like Keynesian theories) and they encourage the government to deal with long-run structural changing policies because according to them in the sort-run there is nothing that monetary and fiscal policy can do to control the fluctuations.
Differences are observed not only in the creation frame of the cyclical fluctuations but also in the methodological frame. There are important differences between the older economists (1930-1950) and the newer. The recent theoretical models are formulated in uncertain environment (stochastic environment) whereas the older models were developed under certain conditions (deterministic models).In this important jump ,the contribution of the swift growth of econometrics and the technological advances is unquestionable .
The empirical investigation of the business cycle, namely the statistical analysis of the data include the estimate of the duration, the variability and the intense of the cyclical fluctuations of particular macroeconomic variables such as GDP, consumption, investment, expenditures, prices etc. Moreover this study includes the investigation of lags ,leads, or the absence of correlation between this variables and the general rate of the economic activity which is the GDP.
What is the business cycle?
During the recession period ,the wages decrease and the unemployment level increases. On the other hand, when the recession period ends then the economy entries the growth period where the wages rise and the unemployment declines. The business cycle refers to the fluctuations to all the macroeconomic variables through time. We measure the fluctuations around a long-term trend.
Mitchell (1913,1927) represented business cycles as a sequence of expansions and contradiction, particularly focused on turning points and phases of the cycle. These cycles are known as classical business cycles.
Lucas(1977) defined the business cycle as the deviations of aggregate real output from trend. Lucas viewed the business cycle facts as the statistical properties of the comovements of deviations from the trend of the macroeconomic aggregates with those of real output. These cycles are known as growth cycles or deviation cycles.(责任编辑：BUG)