Real business cycle theory

Real business cycle theory is the theory according to which economic fluctuations can be explained by real changes in the economy (such as changes in technology) and without any role for nominal variables (such as the money supply).

Definition

According to Macroeconomics by Mankiw (7th edition),

Real business cycle theory. The theory according to which economic fluctuations can be explained by real changes in the economy (such as changes in technology) and without any role for nominal variables (such as the money supply).