Economic Growth, Unemployment, and Business Cycles

Abstract

This paper explores relationships among economic growth, unemployment, and business cycles by constructing a model, which views the process of creative destruction as a major source of business cycles, as well as of economic growth. The main results are as follows: first, the long-run growth rate has a negative relationship with the amplitude of business cycles. Second, the growth rate has a negative connection with the frequency of slump. Third, a permanent shock causes unemployment, but a transitory shock leads to full employment.