The Austrian Theory of Business Cycles: Old Lessons for Modern Economic Policy?

 
Author/Editor: Oppers, Stefan E.
 
Publication Date: January 01, 2002
 
Electronic Access: Free Full text (PDF file size is 821KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: This paper reviews the "Austrian" theory of the business cycle first proposed by Friedrich Hayek in the 1920s. His theory claimed that credit creation by monetary authorities would push investment beyond society's long-term willingness to save, creating a mismatch between supply and demand that would inevitably cause recession. The theory argued, moreover, that expansionary policies in recession could generally only postpone the necessary structural adjustment, making the subsequent correction more severe. Modern followers of this theory see Austrian features in a number of recent business cycles, including Japan in the 1980s and 1990s, and the more recent U.S. slowdown.
 
Series: Working Paper No. 02/2
Subject(s): Business cycles | Economic policy | Monetary policy

Author's Keyword(s): Austrian School | Hayek | Friedrich (1899-1992) | business cycles | monetary policy
 
English
Publication Date: January 01, 2002
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA0022002 Pages: 15
Price:
US$15.00 (Academic Rate:
US$15.00 )
 
Price Delivery Note: Prepayment required for individual copies. An annual subscription is $375.00 a year. It includes 12 monthly shipments and priority mail delivery. The Stock No. for the subscription is WPEA.
 
Please address any questions about this title to publications@imf.org