The latest installment in the Understanding Money Mechanics series summarizes the theory of the business cycle originally published in 1912 by Ludwig von Mises and elaborated by Friedrich Hayek.
Austrian economists do not have crystal balls, but Austrian business cycle theory provides a sure foundation for identifying looming economic crises and exacerbating factors, even if the precise timing of a downturn cannot be known.
One of the important aims of the Anatomy of the Crash is to highlight the truly global nature of the monetary policy failings since 2008—not simply critiquing the actions of the Federal Reserve, but their colleagues at the European Central Bank, the Bank of Japan, and elsewhere.
If you've wanted to read Human Action, this is your opportunity to hear it explained by great economists and scholars!
Three Austrian macroeconomic models—those of Böhm-Bawerk, Hayek, and Garrison, are reviewed and compared. At a general level, they share several important characteristics.
Finn Kydland and Edward C. Prescott (KP), the 2004 Nobel laureates in economics think that technological shocks can explain 70 percent of economic fluctuations in postwar US data. Unfortunately their quantitative methods are simplistic and ignore the real problem: central banking.
Central banks have done nothing to end the boom-and-bust cycle. Instead, their unscrupulous interventions in credit markets just prolong the boom. But it's a huge mistake to assume that bringing market interest rates to zero will create a perpetual boom.
Brazil's most severe recession in over a century, which lasted over two years and saw unemployment of nearly 12 percent, offers empirical support for the Austrian business cycle theory.
While Otaki appropriately criticizes stimulus spending, he inexplicably attributes Japanese stagnation to the failure to follow Keynes.
Can policy-induced deviations from the natural rate of interest increase roundaboutness in production? Mark Gertsen studies 28 developed economies using an ARDL model, and finds Austrian boom-bust dynamics.
