Derivation of the general macroeconomic dynamics equation describing the joint interaction of long-term growth and business cycles (Q957816)

An attempt is made for the first time to develop a continuous real business cycles model by deriving a general differential equation of macroeconomic dynamics based on the interaction between economic growth and cyclic oscillations. The derivation of the general macroeconomic dynamics equation follows the most fruitful scheme developed by Philips. The scheme assumes that the planned values of consumption and capital investments are realized. The author also uses this assumption, since it is economically most significant. Therefore, the plans of consumption and capital investments transform with a certain delay into actual expenditures yielding a production output.