MACROECONOMICS IS largely divided into two subfields. One focuses
on the short run, on the study of business cycles. The other focuses on
the long run, on growth and its determinants. The assumption implicit
in this division is that the medium run is primarily a period of transition
from business cycle fluctuations to growth. This simplification is clearly
convenient, but it is misleading. Modern economies are characterized
by medium-run evolutions that are quite distinct from either business
cycle fluctuations or steady-state growth.