Summary Of The International Business Cycle Theory

Traditional real business cycle (RBC) theory was set up and developed by Kydland and Prescott in 1982 and King, Plossor in 1983,the theory was built on dynamic stochastic general equilibrium model, through the dynamic programming approach intertemporal utility maximization behavior, the final model can explain the changes in the cyclical fluctuations in a closed economy in the output, employment and investment. However, because the theory itself is based on the assumption that a single closed economy analysis of economies, while ignoring the inter-linkages with the international community continuous developing, the international real business cycle theory which is developed after the 90's in the progressive procedure has obtained a broader concern on the perspective. It opens its views, through the construction of a two (or more) countries between the dynamic stochastic general equilibrium model analysis of international macro-economic variables between the association for mobility, volatility and sustainability of economic variables and values very well as an measurement in studying characteristics of the international coordination.However, according to RBC, the theory of IRBC developed from the theory of RBC after the introduction of the real economy was found that the characteristics of a series of economic data and the fact that the inconsistency with the model, the most important of which are two anomalies: the quantity and price anomalies. Based on early IRBC basic research, study for the IRBC abroad has entered new areas, in order to solve these two anomalies, some scholars have tried to introduce a model of imperfect market assumptions that the market is no longer complete, by introducing the price and wages sticky, the market factors such as friction and trade barriers; also some other scholars try to better address the reality and the inconsistencies between the theory by decomposing the sectors of production and consumption. Stochastic dynamic general equilibrium modeling approach is characterized by the use of a calibration method to be fully fit the economic model of economic data, it was later adopted by the scholars as well as the assumptions on the model changes the local structure, in the model and the economic data has been made with made great progress.This paper studies the theory of international real business cycle , reviews the IRBC theory on dealing with the economy for the process modeling; data processing, model fitting, as well as the areas of improvement. The first part is the meaning of the theory and innovation, the second part reviews the classical real business cycle theory and gives a brief description of the RBC theory which is closed under the conditions of an open economy can not solve the problem of economic fluctuations, the third part presents the IRBC theory, which is mainly based on the RBC theory method on data processing and transmission mechanism ,the fourth part of the article's summary and policy recommendations, based on the current international economic cycle has been some combination of a reliable conclusion of China's real economic situation and the conditions put forward some policy recommendations.