As pointed out by Professor Kirzner (2001, pp. 137, 140), Mises did not start out with the intent to develop a theory of the trade cycle. The trade cycle argument first appeared in the last few pages of The Theory of Money and Credit (1912). This early development of Austrian business cycle theory was a direct manifestation of Mises’s rejection of
The current economic conditions in the U.S. compared to the conditions of the period from 1995–2000 have generated, according to Edmund Phelps (” False Hopes for the Economy and False Fears ,” Wall Street Journal , June 3, 2003), two false hopes for the economy and two false fears. But is he justified in his interpretation of these false hopes and
Edmund Phelps of Columbia University writing in the WSJ (June 3, 2003) critiques the Austrian (Mises-Hayek) theory of the business cycle with no reference at all to the central-bank induced artificiality of the boom phase, which is the very core of the theory: One of the most unreasoning fears, yet pervasive, is the nightmare of interwar Austrian
Edmund Phelps’s “False Hopes for the Economy-and False Fears” (WSJ 6/3/03) attempt to undermine the current resurgence of interest in Austrian cycle. He states, “One of the most unreasoning fears, yet pervasive, is the nightmare of interwar Austrian cycle theory: ‘overinvestment’. But in truth, what should be real is the fear of the consequences
A new working paper on Mises.org: Capital Based Macroeconomics: Boom and Bust in Japan and the U.S. by John Cochran and Noah Yetter (Metropolitan College of Denver) Some economists and the financial press believe that the U.S. in the 1990s and Japan in the 1980s experienced economic growth driven by a positive productivity shock. The economic
Conrad Black, in today’s Wall Street Journal ($), defends the myth that the Roosevelt policies saved markets and capitalism from the ravages of the Great Depression. He does partly by making unemployment appear worse than it was at the begining of his term and better than it actually was towards the end of his term. Black states that unemployment
As a partial verification that Adam Smith should not be thought of the as founder of free-market economics (Rothbard’s critique in his History of Thought ), and a major confirmation of the misdirection of effort by much of the economics profession, Bantam Books choose Professor Krueger to write an introduction to a new reprint of the Wealth of
The question has come up whether business cycles are more or less severe, and the economy more or less volitile, today than in the past. The most recent National Economic Trends from the St. Louis Fed provides evidence for a decline in volatility post 1962. Cited is a study by Stock and Watson (”Has the Business Cycle Changed and Why?” NBER
Re: the Great Depression controversy . Hayek in Unemployment and Monetary Policy: Government as Generator of the “Business Cycle” (1979, 13) argues, “The chief conclusion I want to demonstrate is that the longer the inflation [the increase in the effective quantity of money] lasts, the larger will be the number of workers whose jobs depend on a
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