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Business cycles are one of the best sources to understand current situation of a country’s economy. Michal Kalecki denotes investment as the best explanatory for the dimension and reason of cycles; on the other hand Schumpeter considers that innovation should be placed in a different position in this regard. In addition, both Kalecki and Schumpeter verify that investment and innovation are related with each other because innovation is also an important subject for investment. It is expected that investment and innovation have the effect in the same direction on output. In this study, business cycles have analyzed for 1971-2009 period by using the yearly data in Turkey and Greece and it has been dealt effects of investment and innovation on cyclical fluctuation. In this paper which growth rates have been discussed, ordinary least square estimation method has been used. In this respect firstly, it has been examined that the effect of innovation on investment and income. After that examined that effect of investment on output and finally innovation and investment have been evaluated by considering the effects on the output. It has been found that the obtained results support the views of Kalecki for both of the countries.