Interview with Bob Muprhy

Check my interview with Bob Murphy. We talked about my work with Peter Lewin financial applications to capital theory and its implications for the austrian business cycle theory, fractional reserve banking, and how the Fed “broke” the usual way to perform monetary policy.

Access the interview here.

WP: The Upper Turning Point in the Austrian Business Cycle Theory

Roger Garrison describe a la teoría austriaca del ciclo económico (ABCT) como una teoría de auge insostenible, en lugar de ser una teoría que explique (en detalle) la caída o crisis económica. Para mantener el efecto sobre producción y empleo, la autoridad monetaria debe incrementar el ritmo de expansión, lo cual es un camino insostenible.

Pero que sucede, se pregunta Jeffrey Hummel, si la expansión monetaria es constante en lugar de creciente. Debe, eventualmente, la economía caer en una crisis o es una situación estable (aunque no optima). O incluso, es posible que la economía se acomode a la expansión monetaria y este sea el nuevo “equilibrio”? De acuerdo al ABCT, debe toda expansión monetaria culminar en crisis?

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WP: The Role of Capital Structure in ABCT

En este corto paper junto a Peter Lewin resumimos nuestro trabajo en teoría del capital y ciclos económicos que hemos realizado en los últimos dos o tres años. Este paper fue para un panel especial sobre el rol de la teoría del capital en la teoría austriaca del ciclo económico. Para los interesados en una lectura corta y no técnica sobre nuestro trabajo en temas de ciclos, este paper es un buen resumen.

We argue that the application of financial analysis, especially that of duration, clarifies and supports the application of the average period of production in ABCT. We also suggest that the focus in the recent ABCT literature should be more on the average period of production (APP) and less in the stages of production as depicted in Hayek’s triangle in Garrison’s model.

Acceder al paper en SSRN.

Central Banking and Crisis Management from the Perspective of Austrian Business Cycle Theory

Gunther Schnabl

University of Leipzig – Institute for Economic Policy

CESifo Working Paper Series No. 6179

Abstract:

The paper analyses the evolvement and effects of central bank crisis management since the mid 1980s based on a Hayek-Mises-Wicksell over-investment framework. It is shown that, given that the traditional transmission mechanism between monetary policy and consumer price inflation has collapsed, asymmetric monetary policy crisis management implies a convergence of interest rates towards zero and a gradual expansion of central bank balance sheets. From a Hayek-Mises-Wicksell perspective asymmetric central bank crisis management has contributed to financial market bubbles, decreasing marginal efficiency of investment, increasing income inequality and declining growth dynamics. The economic policy implication is a slow but decisive exit from ultra-expansionary monetary policies.

Number of Pages in PDF File: 42

Keywords: Hayek, Mises, Wicksell, monetary overinvestment theory, asymmetric monetary policy, financial crisis, Goodhart’s Law, marginal productivity of investment, secular stagnation

JEL Classification: E520, E580, F420, E630

 

ABCT: Garrison’s Model vs Finance

During the VI International Conference: The Austrian School in the 21st Century, Adrian Ravier asked me if my presentation had any conflicts with Garrison’s model of the ABCT (Austrian Business Cycle Theory). My presentation was an overview of the work I’ve been doing with Peter Lewin for the last 2 years or so. In our work, we apply finance to capital theory and business cycles, in particular to the ABCT.

Since I don’t think I answered in the most clear way, and since this might be a topic of general interest, I will try to explain my answer here. Of course, these are my thoughts and I don’t intend to put my words on Lewin.

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SMP: ABCT and the Marginal Entrepreneur

Post en Sound Monery Project sobre expectativas racionales y teoría austriaca del ciclo económico.

A few days ago Alexander W. Salter wrote an interesting post on the problem of optimal resource allocation during an Austrian business cycle. His argument is that the Austrian business cycle theory (ABCT) can be understood within “a framework of rational expectations and ‘equilibrium always’ modeling conventions.” The argument against the ABCT based on rational expectations is that if we assume a representative agent, then it is not plausible to assume that he persistently errs on investing in projects that might be too long or roundabout. If the agent truly is rational, then he should be able to sort out the “model” and correct his mistakes rather than always erring on the “too long or “roundabout” side.

Seguir leyendo en SMP.

WP: An Empirical Application of the EVA(R) Framework to Business Cycles

Junto a Peter Lewin, en este paper extendemos el trabajo que hemos estado realizado en aplicar finanzas a teoría del capital al campo de estudios empíricos. Usando métricas de EVA(R) estudiamos la correlación entre tasas de interés, política monetaria, y el tamaño (capital financiero) de firmas.

En resumen, la estructura del paper es la siguiente. Como argumentamos en papers anteriores, empresas con un mayor capital financiero posee mayor duration (roundaboutness o período promedio de producción) que empresas con un menor capital financiero. A modo de referencia tomamos las 10 empresas más grandes (HD -high duration) y más pequeñas (LD -low duration) que se encontraban en el Dow Jones a inicios del 2002 (aproximadamente cuando comienza la política expansiva de la Fed.) Luego utilizamos tasas de corto y largo plazo para evaluar si sus movimientos afectan el ratio de empresas más roundabout (duration) respecto a empresas menos roundabout.

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NPPE—New Perspectives on Political Economy, Vol. 10, No. 1

NPPE_6_1-1Se ha publicado un nuevo ejemplar de la revista NPPE. Abajo el detalle de artículos y el acceso a todos los documentos.

Articles

Jan Winiecki: Lessons From Developmental Strategies Over The Last
Hundred Years

Daniil Gorbatenko: Austrian Business Cycle Theory Without Unrealistic
Constructs

Ivan Jankovic: Heterogeneous Capital and the Coasean Firm – A Critique of Some Recent Developments in the Austrian Theory of the Firm

BOOK REVIEW

Tyler Watts: Inventing Freedom: How the English-Speaking Peoples Made the Modern World by Daniel Hannan, 2013.

Acceda aquí a todos los documentos.