【摘要】The 2004 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel goes to the researchers whose contribution concerns two closely related areas of macroeconomic research: the time consistency problem of macroeconomic policy making and the driving forces behind business cycles.This paper gives a detailed and thorough introduction to the methodologies and contributions of the prize winning theories. In the context of political and economic environment, this paper demonstrates the application possibility of Kydland and Prescott's analysis in China.