Growth and Economic Cycles

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This chapter explores the foundations of some theories about economic growth and business cycles by surveying influential works of political economy. Firstly, we examine Adam Smith’s contribution to the study of the impacts of the division and the specialization of labour on productivity and economic growth in the context of free markets. Then, we present the contribution of Joseph Schumpeter to the capitalist development based on cyclical innovations as structural changes in a longterm process of creative destruction. Finally, we consider the more recent writings of Hyman Minsky that examined the real-world of financial institutions and studied issues connected with growth, business cycles and financial institutions.