Discussion paper

DP1642 Business Cycles and Long-run Growth

This survey discusses the effect of macroeconomic fluctuations on long-run growth from both a theoretical and empirical perspective. It emphasizes the ?opportunity cost? approach, which states that firms will intertemporally substitute productivity-enhancing activities for regular production activity during recessions. It provides aggregate evidence in favour of the opportunity cost approach.


Saint-Paul, G (1997), ‘DP1642 Business Cycles and Long-run Growth‘, CEPR Discussion Paper No. 1642. CEPR Press, Paris & London. https://cepr.org/publications/dp1642