According to Milton Friedman’s Plucking Model, economies follow a trend, and are “plucked” temporarily downward by busts, before returning to the trend. Today, many scholars use this theory to argue against Austrian Business Cycle Theory. But in recent years, this theory has failed to reflect the data. Ryan Murphy explains in the Spring 2015 issue of The Quarterly Journal of Austrian Economics:
This brief note points out that Milton Friedman’s “Plucking Model” has not held following the Great Recession. Friedman argued that the Plucking Model offered evidence against theories like Austrian Business Cycle theory; the bust was what needed explanation, not the boom. But as many economists have pointed out, the years leading up to the Great Recession fit many of the stylized predictions of the Austrian Business Cycle. Given their observations, it is of interest that the bust in recent years has not followed the Plucking Model.
