Introduction

This paper considers a number of contributions which have attempted to formulate business cycle models in a disaggregated framework. In the history of economic thought the fact that ‘structural change’ in the sense of changes in the relationships of components (industries, firms, activities) of an economic system to each other plays an important role in the dynamics of aggregate economic fluctuations has long been recognised. Most prominently, we find a strong emphasis on this relationship in the writings of Marx and Schumpeter. But a host of other writers have picked up this theme, from the late nineteenth- and early twentieth-century contributions of Michail Ivanovic Tugan-Baranowski, Mentor Bouniation, Albert Aftalion, Arthur Spiethoff to the interwar contributions of such diverse figures as Rudolf Hilferding, Otto Bauer, Friedrich August von Hayek and Dennis Robertson. They all emphasised the importance of industrial structural change in the form of repercussions of the phases of the industrial cycle upon technical change, the uneven growth of industries, the degree of market concentration, etc. With Keynes and the advent of short-run aggregate macroeconomic analysis these issues were pushed into the background, only to reemerge after 1973 when the experience of two oil crises and the strong competitive challenge from newly industrialising countries put the issue of industrial structural change again near the top of the agenda.