Capital and Interest Theory

The purpose of this paper is to explain the marginal efficiency of capital. The net present value diagram is derived and used to illustrate how the interest rate regulates the intertemporal allocation of resources.

Last week’s decision by the ECB to cross the border into negative territory marks a historic event and shows just how far central banks are willing to go to destroy the global economy.

Low interest rates combined with high-risk fractional reserve banking creates a powder keg on which we’re sitting today, writes Frank Hollenbeck.

Do we now have the Third Culture that C. P. Snow saw coming to life? It would appear so.

Booms and busts are brewing in the real economy, but computers that can quickly solve math problems won’t tell you much about how business cycles w

Garrison's Time and Money picks up where Hayek left off, developing a macroeconomic model based on Austrian capital theory that provides significant insights into macroeconomic phenomena. 

In a recent paper, Guido Hülsmann (2002) advances the revolutionary idea that Austrian economists ought to base their concept of originary interest on the spread between the value of an end and the value of the means used to achieve the end. He points out that this idea stands in opposition to Ludwig von Mises’s argument that the concept should be based on the assumption of time preference, as presented in Human Action (1966). He also argues that whereas his idea enables one to link originary interest, as he defines it, to market interest, Mises’s idea does not. Hülsmann uses most of his paper to articulate his new idea. The first part of his paper, however, is largely a critique of Mises’s theory.

Hayek’s works have continued to influence Foss, so it is only appropriate, therefore, that the author pay homage to him. Specifically, Foss pays homage by addressing a favorite Hayek topic—namely that of capital theory.

As substantial as economist as Schumpeter could claim that interest is a disequilibrium phenomenon and fantasize about a long-run equilibrium where market forces have pushed the interest rate to zero. 

Time and Money is a multifaceted achievement. Within its pages the reader will encounter business cycle theory, capital theory, comparative economic thought