The two preceding chapters presented some historical accounts of two central features of the equilibrium business cycle theory (EBCT): the equilibrium approach to business cycles and its econometric strategy.

In Chapter 2, the history of cycle theory was examined from a hypothetical perspective as the history of theoretical attempts to incorporate business cycles into classical equilibrium theory. Viewed in this way, business cycle theories in the nineteenth century were an apparent failure, since they endeavored to construct a new foundation of economic reasoning beyond the classical tradition, rather than revise and extend equilibrium theory. The task of either extending the realm of classical theory so as to explain the puzzling business cycle or developing a cycle theory based on classical propositions was largely left to cycle theorists of the interwar period, in particular to Hayek. Though his cycle theory was rejected by Keynesian economists and thus disconnected from what became for a time the dominant mode of economic thinking, it was a genuine theory of the cycle that fell within the strict tradition of classical doctrine.

In Chapter 3, the early econometric movement was discussed at length to provide a basis for understanding the Cowles Commission method in historical context. The econometric approach to business cycles, virtually launched by the commission, provided a completely different way of looking at the old puzzle of the cycle phenomenon. In brief, this approach showed that, once a stable economic structure was discovered by means of econometric inquiry, important characteristics of business cycles like periodicity and amplitude could be derived directly from the parameters of the econometric system.