This monograph is devoted to the analysis of the dynamics of business cycles and stabilization
policies. The analysis is conducted in models of the AS-AD type focusing on involuntary
unemployment and capital accumulation. Major conclusions are the following. (1) Sectoral
imbalances once emphasized by such business-cycle theorists as K. Marx A. Spiethoff and F.A.
Hayek are rectified in finite time by competitive investment allocation leaving aggregate
variables as the main variables of business cycle dynamics. (2) The chronology of events during
a cycle is established which resolves the so-called real wage puzzle. (3) Owing to the
crowding-out effect on investment fiscal stabilization policies can destabilize the business
cycle dynamics if implemented too intensively. (4) If coordinated properly monetary
stabilization policies can remove the destabilizing tendency of fiscal stabilization policies.
