Quarterly Journal of Austrian Economics

Volume 14, Number 3 (Fall 2011)

The objective of this article is to present an extension of Garrison's captial-based macroeconomics" model. Garrison's objective was ― starting from a full employment equilibrium situation ― to build a model that provides insight into the causes of crisis and depression. We offer ― starting from an unemployment situation ― an explanation of why expansionary monetary policies fail in the longer term to solve the unemployment problems association with recessions.  This extension provides a fresh perspective on the debates between Hayek and Keynes in the 1930's and over "quantitative easing" today.