Quarterly Journal of Austrian Economics

Volume 6, No. 2 (Summer 2003)

Austrian business cycle theory (ABCT), we contend, is essential to understanding the recent boom and bust cycle in the American (and, to a great extent, the global) economy. That does not mean that every recent macroeconomic event is explained by ABCT. For instance, exchange rate manipulation (e.g., the Reverse Plaza Accord) is not a part of standard ABCT, yet it played a key part in the global macroeconomic picture of recent years. However, as long as central banks continue to engage in episodic credit expansion, we believe that ABCT remains a vital component in the macroeconomist’s tool chest.