Causal and Stochastic Elements in Business Cycles

1. Facts: A leisure term with an unbounded value function, when added to utility in the Lucas (1988) ''mechanics of economic development'', expands enormously the range of data covered by the theory. To explain this we have to ask two questions. First: why leisure would be so much desired? Perhaps because leisure is one''s own time and such a leisure term means an unbounded value of individual fre...