Abstract: This paper introduces the contribution by Finn Kydland and Edward Prescott the Nobel Prize winners in 2004 to the research of macro-economic policy and business cycles, as well as the content of their theory and the background that the theory was created from, pointing out the special contributions to the policy-making on macro-economy and the drive of business cycles. It also regards that their contribution not only changed the research methord of maden economics, but also left influence on the macra-economic policies to be made by the governments over the world, especially on those of current policy.