Mises Search

In the late 1960s  Edmund Phelps and Milton Friedman challenged the popular view that there can be a sustainable trade-off between inflation and unemployment. In fact, over time, according to PF, loose  central bank policies set the platform for lower economic growth and a higher rate of inflation, or stagflation. PF’s Explanation of Stagflation

Monopolies are believed to undermine individuals’ well-being, including being the cause of large increases in the prices of goods and services. According to Jean Tirole, the 2014 Nobel winner in economics, monopolies undermine the efficient functioning of the market economy by influencing the prices and the quantity of products, making consumers

Some have argued that new technological ideas, unlike material inputs and labor, are not in themselves scarce. Consequently, it is further argued that new ideas for more efficient processes and new products can make continuous economic growth possible. So-called experts, however, are of the view that in a fully competitive environment, firms are

Many economists incorrectly assume a growing economy also requires a growing money stock, assuming that economic growth gives rise to a greater demand for money. It is held that failing to increase money to facilitate increased trade will lead to a decline in prices of goods and services, destabilizing the economy and leading to an economic

Many incorrectly assume that the overall economy’s output increases by a multiple of the increase in expenditure by government, consumers, and businesses. For instance, if out of an additional dollar received individuals spend $0.90 and save $0.10, then if consumers spending were to increase by $100 million, it is held that the overall output in

According to some commentators, to counter inflation interest rates in the US must increase to a level that effectively restrains the economy. It is held that this increase in interest rates does not have to cause a recession if Fed’s policy makers could orchestrate a “soft landing.” The economy is portrayed as a spaceship that occasionally

According to some “ experts ,” there is an urgent need to remove cash from the economy. It is held that cash provides support to the “shadow economy” and permits tax evasion. Another justification for its removal is that, in times of economic shocks, which push the economy into a recession, the run for cash exacerbates the downturn—it becomes a

Most experts agree that, through the manipulation of the short-term interest rates, the central bank can also determine the direction of the long-term interest rates. Some popular thinking alleges that the long-term interest rates are the average of the present and the expected short-term interest rates. Hence, it would appear that the central

To gain insight into the state of an economy, most economists rely on a common statistic named the Gross Domestic Product (GDP). The GDP looks at the value of final goods and services produced during a particular period, usually a quarter or a year. Using this measurement statistic assumes that what drives the economy is not the production of

It is widely held that financial asset markets always fully reflect all available and relevant information, and that adjustment to new information is virtually instantaneous. This way of thinking is also known as the Efficient Market Hypothesis (EMH), and is closely linked with the Rational Expectations Hypothesis (REH), which postulates that