Providing a reasonable explanation for the business cycle has
been the research agenda for many economists since the early 20th
century, from Mitchell (1913), Pigou (1927) and Adelman and Adelman
(1959) to Lucas (1972), Black (1982) and King and Plosser (1984). For a
review, see Zarnowitz (1985). Most attempts to explain the sources of
macroeconomic fluctuations' attribute the variability in output and
prices to only a few sources, sometimes to\mJ.y one. Kydland and
Prescott (1982) and others proposed technology shocks as the main source
of aggregate variability; Barro (1977) pointed to unanticipated changes
in money stock; Lilien (1982) argued for 'unusual structural shifts'
such as changes in the demand for goods relative to services, and
Hamilton (1983) concluded in favour of oil price shocks.
