There are many attempts to construct dynamic, with stochastic characteristics, growth models that are to replicate short and long term fluctuations in macroeconomic variables. These models entail endogenous growth factors (R&D expenditure and the accumulation of human capital) and finite difference stochastic equations that correspond to the basic model of real business cycle and its extensions. Some of these extensions affect model dynamics in the long period. Empirical data are decomposed into short term stochastic business cycle component and the long term trend. Real business cycle models can successfully be used as a platform that incorporates the endogenous growth mechanism into the unified model of growth and business cycle.
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