The Role of Money in the Business Cycle

Abstract

The aim of this paper is to reemphasize the money theory of exchange which is centered on the function of exchange medium of money, and make a contribution towards linearization of the quantity equation of exchange. A dynamical quantity equation is presented and an important balanced path of economic evolution is derived. To understand the business cycle we propose a hypothesis of natural cycle and driving cycle concerning the evolution of the balanced path and plentiful conclusions can be made.

arXiv commentI am so sorry, the hypothesis proposed by this paper would be not appropriate because there is no mechanism on which can be based between money and output value in this paper. The equation maybe more empty