Interaction between trend and cycle in Keynesian and Neo-Marxian dynamical models of the economy∗

The problem of the interrelation of economic growth and economic cycles has recently been at the core of research on macroeconomics. In the last two decades or so, indeed, the integration of growth and business cycle theory has been the Þrst item on the real business cycle (RBC) theorists’ agenda.1 In this framework, the attempt to achieve such an integration turns into the attempt to explain the observed ßuctuations of economic activity as a byproduct of the same economic forces that lead to growth in the neoclassical model of capital accumulation, the latter being the benchmark model which “... must be at the core of any understanding economists will provide of business cycles” (Plosser, 1989, p. ; my emphasis). Two considerations seem appropriate in this regard. First, there is no doubt that RBC theorists believe that the integration of growth and business cycle theory is achieved in their models. Yet, the resulting dynamics is barely discussed from this angle and one has the impression that the supposed integration between growth and business cycle theory is taken for granted rather than proved.