Business Cycles
The Marginal Efficiency of Capital: A Comment
ABSTRACT: The impact of interest rates on investment choices is a key element in both Keynesian and Austrian theories of the business cycle. Fuller (2013) compares the Keynesian Marginal Efficiency of Capital approach to the Austrian Net Present Value approach, claiming that the two give different rankings of investment projects. This comment provides examples to show that this is only true if factor prices are held constant. If factor prices reflect the discounted present value of the project, then the different rankings between the approaches vanishes. This result further highlights a fundamental difference between the Austrian and Keynesian views: factor price stickiness. This difference in assumptions drives the opposing views of monetary policy.
The Natural Rate of Interest Rule
This article reviews the Fed’s performance with particular emphasis on its contribution to the 2008 crisis and then suggests an alternative policy which, had it been in place would have dampened the most recent boom and bust.
The End of Bubble Blowing?
In this fascinating interview, Mark Thornton explains how the Austrian business cycle predicted the housing bubble, and how those cashing in on it
Eurozone Craves More Inflation
As of this week, when Eurozone price inflation reached negative levels, ECB's Mario Draghi decided to throw caution to the wind and brace “for further measures, which could, if needed, be implemented in a timely manner”. Estimates for the European QE program are around €500 billion, but the overall size and timescale will most likely remain open-ended.
Shawn Ritenour reviews Holcombe’s Advanced Introduction to the Austrian School of Economics
Recent Media and Interviews with Mark Thornton
The Power and Market Report: "Has the Oil Bubble Popped?" and more.
Canadian Housing Bubble: Small Signs?
Are Rising Subprime Mortgages a Small Sign of Big Things to Come?
Should Economics Emulate Natural Sciences?
The laws of physics can never be absolutely established. For some other law may prove more elegant or capable of explaining a wider range of facts. Hypotheses must be constantly tested. Economics is not like this.
The Economic Crash that Cured Itself: A Conversation with James Grant
The Economic Crash that Cured Itself: A Conversation with James Grant about the Depression of 1921.