Abstract

This is a brief review of one of the most important theories about the factors causing cyclic fluctuations in economy. Starting from the postulates the classical economic school and its inability to explain the existence of prolonged deviations from full employment, and economic crises in particular, conclusions on the role of the early theories for the development of economic knowledge are drawn. A major contribution thereto are the presented key issues driving the search for the truth in economics until the present day: whether the economic system is stable; whether equilibria corresponding to employment levels different from full employment exist; how to treat the exogenous influences and whether the cyclic fluctuations result from one factor only.