The Experts below are selected from a list of 327 Experts worldwide ranked by ideXlab platform
Nicolas Cachanosky - One of the best experts on this subject based on the ideXlab platform.
-
The upper turning point in the Austrian Business Cycle Theory
The Review of Austrian Economics, 2020Co-Authors: Anthony J. Evans, Nicolas Cachanosky, Robert ThorpeAbstract:This paper defends the relevance of Austrian Business Cycle Theory (ABCT) within a fiat money regime, by providing an answer to whether a constant rate of credit expansion necessarily leads to a boom-bust Cycle. We claim that this scenario has two potential outcomes, (1) a change in money demand brings the economy back towards equilibrium or (2) the economy will shift to a sub-optimal but still sustainable path. We identify capital heterogeneity effects and the Ricardo effect as distinctly Austrian explanations for an upper turning point, even in a fiat money regime.
-
Re-switching, the average period of production and the Austrian Business-Cycle Theory: A comment on Fratini
The Review of Austrian Economics, 2019Co-Authors: Peter Lewin, Nicolas CachanoskyAbstract:In a recent contribution to this journal Saverio Fratini (Review of Austrian Economics, 2019) offers a critique of our work on Austrian Capital Theory on the grounds that our conception of capital and “roundaboutness” does not appear to provide adequate support for the Austrian Business-Cycle Theory. In this comment we explain why we think this criticism is wrong.
-
The Upper Turning Point in the Austrian Business Cycle Theory
SSRN Electronic Journal, 2018Co-Authors: Anthony J. Evans, Nicolas Cachanosky, Robert ThorpeAbstract:This paper studies a scenario - one of the six problems with Austrian Business Cycle Theory raised by Hummel (1979) - that the ABCT literature has paid little attention. Will a constant rate of credit expansion necessarily lead to a boom-bust Cycle? We conclude that this scenario has two potential outcomes, (1) a change in money demand brings the economy back towards equilibrium or (2) the economy will shift to sub-optimal but still sustainable path. We identify capital heterogeneity effects and the Ricardo effect as distinctly Austrian explanations for an upper turning point, even in a fiat money regime.
-
Financial Foundations of Austrian Business Cycle Theory
Studies in Austrian Macroeconomics, 2016Co-Authors: Nicolas Cachanosky, Peter LewinAbstract:Abstract In this paper, we study financial foundations of Austrian Business Cycle Theory (ABCT). By doing this, we (1) clarify ambiguous and controversial concepts like roundaboutness and average period of production, (2) we show that the ABCT has strong financial foundations (consistent with its microeconomic foundations), and (3) we offer examples of how to use the flexibility of this approach to apply ABCT to different contexts and scenarios.
-
Expectations in Austrian Business Cycle Theory: Market Share Matters
SSRN Electronic Journal, 2012Co-Authors: Nicolas CachanoskyAbstract:One of the most important objections to the Mises-Hayek Business Cycle Theory is the rational expectations critique. The debate between supporters and critics of the Mises-Hayek Theory has not paid sufficient attention to the problem of differences in expectations and the market share in the allocation of production factors. I represent financially the effects that occur under the Austrian Business Cycle Theory in the market of production factors as well as how economic imbalances occur when a central bank follows an expansionary policy and entrepreneurs have different expectations.
David Howden - One of the best experts on this subject based on the ideXlab platform.
-
The rise and fall of the subsistence fund as a resource constraint in Austrian Business Cycle Theory
The Review of Austrian Economics, 2017Co-Authors: Eduard Braun, David HowdenAbstract:The “subsistence fund” was once an integral part of Austrian Business Cycle Theory to indicate the resource constraint on the ability to complete investments. Early agrarian and industrial economies were constrained by resource availability in a manner consistent with that alluded to by the subsistence fund. This link became more tenuous as the growth of the financial economy in the twentieth century removed the apparent importance of pre-saved goods to complete investments. At this point the subsistence fund came to be used only as a metaphor and was jettisoned from Austrian Business Cycle Theory. The present paper points to the merits of the subsistence fund in explaining the turning point of the Business Cycle as compared to alternative explanations. It also works out the deficiencies in historical expositions of the Austrian Theory based on the subsistence fund, and traces the evolution of the resource constraint at the core of Austrian economists´ treatment of the Business Cycle.
-
The Rise and Fall of the Subsistence Fund as a Resource Constraint in Austrian Business Cycle Theory
2017Co-Authors: Eduard Braun, David HowdenAbstract:The “subsistence fund” was once an integral part of Austrian Business Cycle Theory to indicate the resource constraint on the ability to complete investments. Early agrarian and industrial economies were constrained by resource availability in a manner consistent with that alluded to by the subsistence fund. This link became more tenuous as the growth of the financial economy in the 20th century removed the apparent importance of pre-saved goods to complete investments. At this point the subsistence fund came to be used only as a metaphor and was jettisoned from Austrian Business Cycle Theory. The present paper points to the merits of the subsistence fund in explaining the turning point of the Business Cycle as compared to alternative explanations. It also works out the deficiencies in historical expositions of the Austrian Theory based on the subsistence fund, and traces the evolution of the resource constraint at the core of Austrian economists´ treatment of the Business Cycle.
Anthony J. Evans - One of the best experts on this subject based on the ideXlab platform.
-
The upper turning point in the Austrian Business Cycle Theory
The Review of Austrian Economics, 2020Co-Authors: Anthony J. Evans, Nicolas Cachanosky, Robert ThorpeAbstract:This paper defends the relevance of Austrian Business Cycle Theory (ABCT) within a fiat money regime, by providing an answer to whether a constant rate of credit expansion necessarily leads to a boom-bust Cycle. We claim that this scenario has two potential outcomes, (1) a change in money demand brings the economy back towards equilibrium or (2) the economy will shift to a sub-optimal but still sustainable path. We identify capital heterogeneity effects and the Ricardo effect as distinctly Austrian explanations for an upper turning point, even in a fiat money regime.
-
The Upper Turning Point in the Austrian Business Cycle Theory
SSRN Electronic Journal, 2018Co-Authors: Anthony J. Evans, Nicolas Cachanosky, Robert ThorpeAbstract:This paper studies a scenario - one of the six problems with Austrian Business Cycle Theory raised by Hummel (1979) - that the ABCT literature has paid little attention. Will a constant rate of credit expansion necessarily lead to a boom-bust Cycle? We conclude that this scenario has two potential outcomes, (1) a change in money demand brings the economy back towards equilibrium or (2) the economy will shift to sub-optimal but still sustainable path. We identify capital heterogeneity effects and the Ricardo effect as distinctly Austrian explanations for an upper turning point, even in a fiat money regime.
-
WHAT AUSTRIAN Business Cycle Theory DOES AND DOES NOT CLAIM AS TRUE
Economic Affairs, 2010Co-Authors: Anthony J. EvansAbstract:Contemporary economic commentators have a habit of dismissing Austrian Business Cycle Theory on the grounds that the implications for policy responses are unconvincing. Often the ‘Austrian’ position is misunderstood. But even if we wish to draw on other schools of thought to understand depressions, this does not affect the importance of Austrian insights to explain the boom.
-
Austrian Business Cycle Theory in Light of Rational Expectations: The Role of Heterogeneity, the Monetary Footprint, and Adverse Selection in Monetary Expansion
The Quarterly Journal of Austrian Economics, 2008Co-Authors: Anthony J. Evans, Toby BaxendaleAbstract:We contribute to the debate over the contemporary relevance of the Austrian Business Cycle Theory (ABC) by making three theoretical developments. First, we claim that the heterogeneous nature of entrepreneurship is the best means to respond to a Rational Expectations (RE) critique. If entrepreneurs are different then the “cluster of errors” are not made by everyone, just those on the margin. And if the marginal entrepreneurs are systematically different from the population as a whole, we avoid the implication of widespread irrationality, even though credit expansion will affect real variables. Second, we argue that the size of the monetary footprint is a more telling signal than the market rate of interest, and will not necessarily be revealed by measured inflation. Therefore attention to the official interest rate or Consumer Price Index is misleading, and an inappropriate way to assess applicability. And third, the main harm from loose monetary policy is not that it encourages entrepreneurs to behave more recklessly with capital, but that it encourages precisely the people who can’t afford capital at the market rate to borrow, and makes them the marginal trader. This suggests that adverse selection is a more important issue than moral hazard. We acknowledge that empirical work is required to verify these claims, and suggest how this might be undertaken.
Lachezar Grudev - One of the best experts on this subject based on the ideXlab platform.
-
The Secondary Depression: An Integral Part of Wilhelm Röpke’s Business Cycle Theory
The European Heritage in Economics and the Social Sciences, 2018Co-Authors: Lachezar GrudevAbstract:Wilhelm Ropke’s secondary depression constitutes an important approach toward understanding economic downturns. Ropke defined the destructive secondary depression as a consequence of a failed purification process (primary depression) without elaborating on their relationship. Thus, literature on Ropke’s work emphasizes the independence of the secondary depression from the primary depression and even considers this independent secondary depression as his only contribution to Business Cycle research. However, Grudev points out that the roots of the secondary depression can be traced back to the primary depression which itself depends on Ropke’s definition of the preceding boom. Grudev concludes that the secondary depression is an integral part of Ropke’s Business Cycle Theory, which can be defined as a distinguishable branch of the “Neo-Wicksellian” School.
-
the secondary depression an integral part of wilhelm ropke s Business Cycle Theory
2018Co-Authors: Lachezar GrudevAbstract:Wilhelm Ropke’s secondary depression constitutes an important approach toward understanding economic downturns. Ropke defined the destructive secondary depression as a consequence of a failed purification process (primary depression) without elaborating on their relationship. Thus, literature on Ropke’s work emphasizes the independence of the secondary depression from the primary depression and even considers this independent secondary depression as his only contribution to Business Cycle research. However, Grudev points out that the roots of the secondary depression can be traced back to the primary depression which itself depends on Ropke’s definition of the preceding boom. Grudev concludes that the secondary depression is an integral part of Ropke’s Business Cycle Theory, which can be defined as a distinguishable branch of the “Neo-Wicksellian” School.
Ellen R Mcgrattan - One of the best experts on this subject based on the ideXlab platform.
-
are structural vars with long run restrictions useful in developing Business Cycle Theory
Research Papers in Economics, 2007Co-Authors: Varadarajan V Chari, Patrick J Kehoe, Ellen R McgrattanAbstract:The central finding of the recent structural vector autoregression (SVAR) literature with a differenced specification of hours is that technology shocks lead to a fall in hours. Researchers have used this finding to argue that real Business Cycle models are unpromising. We subject this SVAR specification to a natural economic test and show that when applied to data from a multiple-shock Business Cycle model, the procedure incorrectly concludes that the model could not have generated the data as long as demand shocks play a nontrivial role. We also test another popular specification, which uses the level of hours, and show that with nontrivial demand shocks, it cannot distinguish between real Business Cycle models and sticky price models. The crux of the problem for both SVAR specifications is that available data require a VAR with a small number of lags and such a VAR is a poor approximation to the model’s VAR. ; Formerly titled: A critique of structural VARs using Business Cycle Theory ; Originally Working paper no. 631
-
a critique of structural vars using real Business Cycle Theory
Levine's Bibliography, 2004Co-Authors: Varadarajan V Chari, Patrick J Kehoe, Ellen R McgrattanAbstract:The main substantive finding of the recent structural vector autoregression literature with a differenced specification of hours (DSVAR) is that technology shocks lead to a fall in hours. Researchers have used these results to argue that Business Cycle models in which technology shocks lead to a rise in hours should be discarded. We evaluate the DSVAR approach by asking, is the specification derived from this approach misspecified when the data are generated by the very model the literature is trying to discard? We find that it is misspecified. Moreover, this misspecification is so great that it leads to mistaken inferences that are quantitatively large. We show that the other popular specification that uses the level of hours (LSVAR) is also misspecified. We argue that alternative state space approaches, including the Business Cycle accounting approach, are more fruitful techniques for guiding the development of Business Cycle Theory.> > Replaced by Staff Report No. 364
-
A Critique of Structural VARs Using Real Business Cycle Theory
Levine's Bibliography, 2004Co-Authors: Varadarajan V Chari, Patrick J Kehoe, Ellen R McgrattanAbstract:The main substantive finding of the recent structural vector autoregression literature with a differenced specification of hours (DSVAR) is that technology shocks lead to a fall in hours. Researchers have used these results to argue that Business Cycle models in which technology shocks lead to a rise in hours should be discarded. We evaluate the DSVAR approach by asking, is the specification derived from this approach misspecified when the data are generated by the very model the literature is trying to discard? We find that it is misspecified. Moreover, this misspecification is so great that it leads to mistaken inferences that are quantitatively large. We show that the other popular specification that uses the level of hours (LSVAR) is also misspecified. We argue that alternative state space approaches, including the Business Cycle accounting approach, are more fruitful techniques for guiding the development of Business Cycle Theory.> > Replaced by Staff Report No. 364(This abstract was borrowed from another version of this item.)
