Quarterly Journal of Austrian Economics - Single Articles

The popularity of the Austrian Business Cycle Theory (hereafter ABCT) continues to grow in both the popular press and the mainstream of the economics profession.

Garrison has given economists a useful way to illustrate Keynes’s theory, but there are two fundamental problems with Garrison’s interpretation.

James Grant proposes that the last time US government did not prescribe the now standard cure for economic slumps consisting of fiscal stimulus and easy money was the downturn of 1920–1921. Grant’s purpose is to test the efficacy of this medicine by checking what happened when it was not administered.

This is a rejoinder to “The Marginal Efficiency of Capital: Comment” by Lucas M. Engelhardt. Engelhardt incorrectly ranks investment projects by Present Value instead of Net Present Value.

Recently the Federal Reserve reached its one hundred year anniversary. This milestone provided a nice occasion for economists to analyze the Fed’s performance in the past century.

This is a brief reply to “The Marginal Efficiency of Capital: Rejoinder.”

ABSTRACT: The circularity problem states that before legal polycentrists can employ price theoretic arguments about market competition, they must first show that legal polycentrism is able to instantiate the institutional framework within which property rights are protected and contracts are enforced. If these requirements are not satisfied, it is illegitimately circular to draw on market competition as an argument for legal polycentrism. This paper indicates that the above problem can be solved by relying on the regression theorem of institutional development, whereby the development of higher-level (hard) institutions is conditioned by the development of lower-level (soft) institutions.

Volume 17, No. 4 (Winter 2014)

Timothy P. Roth

This paper analyzes the period 1867–1879 in American economic history from an "Austrian" perspective.

Book Review by Greg Kaza
Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics

Critics of neoliberalism and its variants including Misesianism have responded to its emergence in two distinct ways: pejoratively,1 or scholarly discourse that seeks to engage neoliberal proponents. The first approach is traceable to the Marxists Kapelush (1925) and Marcuse ([1934] 1968). This low road has been traveled more recently by Krohn (1981), Delong (2009) and Seymour (2010), who, a la Marcuse, smear Mises as pro-fascist when government and private archives show the Austrian worked with U.S. intelligence against Italian fascism and German Nazism in the World War II era.

Volume 17, No. 4 (Winter 2014)

Eswar S. Prasad
Princeton: Princeton University Press, 2014, 432 pages

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.

ABSTRACT: Juan de Mariana may have had more direct lines of influence on the contemporary political denunciation of central banking in the United States than previously thought. As the culmination of a series of monetary theorists of the School of Salamanca, Mariana’s genius was his ability to synthesize and articulate a critique of the inflationary monetary policies of the Spanish Habsburgs. Furthermore, the Jesuit scholar linked his economic analysis to his equally scandalous endorsement of regicide. For their part, both the monetary policy concerns and the rebellious animus of the modern libertarian wing of American politics echo Thomas Jefferson’s views during the early Republic. These views also likely owe something to Mariana’s uniquely menacing confrontations with the Habsburgs. And thanks to the Virginian’s lifelong appreciation of Miguel de Cervantes’s great novel Don Quijote, which was itself heavily influenced by Mariana, the fascinating connections between Jefferson’s and Mariana’s politicized understandings of money are even further intertwined.

Money is an odd book. “Moderation” in the use of a bad measure is no virtue. If cyanide is poison, “drink in small doses” is not the appropriate response. Money falls exactly into this bad pattern.

The Google Ngram Viewer is used to highlight some of the ideas, nomenclature, individuals, and events that have come to comprise the Austrian tradition. Key terms and literature are also examined primarily using the English corpus, with occasional examinations using German and French corpus as well. The Ngram counts of these terms provide a useful way to gauge the success of Austrians, over time, to influence the state of economics and the popular debate.

Keynes’s theory of Aggregate Expenditures from the General Theory is examined and criticized. Keynes suggested numerous reasons why his marginal propensity to consume (MPC) might vary across individuals, over different time periods, and might be fundamentally heterogeneous in other respects, but assumed a constant MPC for tractability.

In The Concept of Equilibrium in Different Economic Traditions, Bert Tieben offers a full-length, extensive study of the concept of equilibrium that chronicles its four-century evolution from the prehistory of classical economics to the heyday of neoclassical economics and contemporary heterodox economics.

During the past forty years, nothing has been more popular in the American university than “interdisciplinary work.” Too often, however, the appropriate prefix for “disciplinary” has been “non” rather than “inter.” Doing something “interdisciplinary” offers an expert in field X the opportunity to lavish ignorance on fields Y and Z. Nowhere has this been more evident than in literary people’s flirtations with economics and law, two of the disciplines most frequently paired with their own.

It’s hard to walk away from Brendan Brown’s most recent book without a feeling of deep disappointment in modern day central banks. T