scholarly journals Economic modelling – Beyond isolation and construction. The case of Austrian Business Cycle Theory as presented by Roger Garrison

2020 ◽  
Vol 70 (2) ◽  
pp. 251-273
Author(s):  
Robert Mroz ◽  
Lukasz Hardt
Keyword(s):  
Business Cycle ◽  
Model Building ◽  
Integrated Approach ◽  
Austrian Economics ◽  
Philosophical Tradition ◽  
Economic Modelling ◽  
Business Cycle Theory ◽  
Austrian Business Cycle Theory ◽  
Austrian Business Cycle ◽  
The One

AbstractThe paper explores the nature of economic models. It is claimed that accounting for it along the isolationism-constructivism line is untenable. A more integrated approach is needed, based on the pragmatist philosophical tradition, focussing rather on the modelling process than on the narrower notion of the model. This argument is backed by a case study: analysis of the Austrian Business Cycle Theory (ABCT) as presented by Roger Garrison, which, as is argued, does not fully fit either the isolationist or the constructivist account of models. It is primarily shown by revealing the fact that learning about the world by using ABCT is not of deductive nature. Therefore, even in the presence of such a strong realistic methodology as the one in the Austrian economics, models used by its adherents are not necessarily perfect isolations. At the same time, this realistic methodology is not in line with the constructivist approach in model-building. The paper should be understood as an exercise in philosophy of economics, namely as an attempt at better understanding of various aspects of economics (here it is models and specifically ABCT) by taking the perspective offered by philosophy of science.

scholarly journals Book Review: "The Skyscraper Curse: And How Austrian Economics Predicted Every Major Economic Crisis of the Last Century"

2020 ◽  
Vol 23 (3-4) ◽  
pp. 627-633
Author(s):  
Michael Novak
Keyword(s):  
Business Cycle ◽  
Austrian Economics ◽  
Business Cycle Theory ◽  
Comprehensive Overview ◽  
Austrian Business Cycle Theory ◽  
Track Record ◽  
The World ◽  
Austrian Business Cycle ◽  
The Business Cycle

Mark Thornton’s The Skyscraper Curse exposes readers to the unique phenomenon of the Skyscraper Index and provides them with a comprehensive overview of Austrian business cycle theory (ABCT). The Skyscraper Index, as readers learn in the first few pages of the book, shows a correlation between the development of a new tallest building in the world and the business cycle. Although the Skyscraper Index does have a strong track record, the skyscrapers are not the heart of the matter but rather the policies of the Federal Reserve that promote and encourage skyscraper development.

scholarly journals Lessons from a Review of Money, Banking, and the Business Cycle

2018 ◽  
Vol 21 (2) ◽  
pp. 97-113
Author(s):  
Brian P. Simpson
Keyword(s):  
Business Cycle ◽  
Interest Rates ◽  
Austrian Economics ◽  
Business Cycle Theory ◽  
Austrian Business Cycle Theory ◽  
Austrian Business Cycle ◽  
The Business Cycle ◽  
Rate Of Profit ◽  
The Relationship

Abstract Shawn Ritenour provides a review of my two-volume book titled Money, Banking, and the Business Cycle in the winter 2016 issue of The Quarterly Journal of Austrian Economics. This paper constitutes a response to some of the criticisms of the book in his review. In this response, I discuss topics such as the nature of profits, the sustainability of changes in time preference, the role of changes in prices versus changes in spending in the business cycle, the relationship between interest rates and the rate of profit, the nature of fraud, and the nature of value. I also discuss whether the structure of production can be measured using the average period of production. I address other issues raised by Ritenour as well. This discussion sheds light on Austrian business cycle theory and the nature of the business cycle.

scholarly journals Preferencia temporal, múltiples tipos de interés y la teoría austriaca del ciclo económico

2021 ◽  
pp. 13-63
Author(s):  
Alejandro J. Zamora
Keyword(s):  
Interest Rate ◽  
Business Cycle ◽  
Interest Rates ◽  
Term Structure ◽  
Jel Classification ◽  
Business Cycle Theory ◽  
Austrian Business Cycle Theory ◽  
Preference Theory ◽  
Austrian Business Cycle ◽  
The One

Traditional expositions of the Austrian Business Cycle Theory (ABCT) rest on the reference to only one – equilibrium – interest rate. This paper, on the one hand, explores the theoretical validity of such a reference and, on the other hand, analyses whether it is essential to the ABCT. To address both issues, we depart from a defense of the recently-disputed Pure Time Preference Theory (PTPT), which purports to explain the cause of the phenomenon of interest and serves as a basis for the ABCT. In the light of our study, in the first place, we reject some of the formulations of the PTPT that lead to erroneous interpretations of this theory and we put forward an enunciation that avoids common confu-sions; secondly, we deny the validity of the reference to only one interest rate as well as its essentiality to the ABCT; finally, we point out the necessity of up-dating the exposition of the ABCT in consonance with the previous conclusions. Key words: Austrian Business Cycle Theory, Business Cycles, Pure Time Prefe-rence Theory, Interest Rates, Term Structure of Interest Rates. JEL Classification: E32, E40, E43, E50, B53. Resumen: Las exposiciones tradicionales de la Teoría Austriaca del Ciclo Eco-nómico (TACE) se apoyan en la referencia a un único tipo de interés de equili-brio. Este artículo, por un lado, explora la cuestión de la validez teórica de dicha referencia y, por otro, estudia si ésta es realmente esencial a la TACE. Para analizar dichas cuestiones, partimos de una defensa de la recientemente cuestionada Teoría de la Preferencia Temporal Pura (TPTP), teoría que preten-de explicar la causa del fenómeno del interés y que sirve de fundamento a la TACE. A la luz de nuestro estudio, en primer lugar, rechazamos ciertas formu-laciones de la TPTP que conducen a interpretaciones erróneas de la misma, proponiendo una enunciación de la teoría que evita confusiones comunes; se-gundo, negamos la validez de la referencia a un tipo de interés único y su carácter esencial a la TACE; por último, notamos la necesidad de actualizar la exposición de la TACE conforme a las conclusiones antedichas. Palabras clave: Teoría Austriaca del Ciclo Económico, Ciclos Económicos, Teo-ría de la Preferencia Temporal Pura, Tipos de Interés, Estructura de Tipos de Interés. Clasificación JEL: E32, E40, E43, E50, B53.

Hayekian Triangles: an application to financial assets

2017 ◽  
pp. 345-364
Author(s):  
Rafael García Iborra
Keyword(s):  
Business Cycle ◽  
Austrian Economics ◽  
Securities Market ◽  
Austrian School ◽  
Financial Assets ◽  
Business Cycle Theory ◽  
Austrian Business Cycle Theory ◽  
Austrian Business Cycle

Hayekian trinagles are a device used by the Austrian school of eco-nomics, especially in the Austrian Business Cycle Theory (ABCT). The purpose of this paper is to show how they can also be used to analyze the fluctuation of the securities market, by adding financial assets to the model. Keywords: Austrian Economics, business cycle theory, financial assets, Hayeki-an triangles. Classification JEL: E14, E32, E51, G01. Resumen: Los triángulos Hayekianos son una herramienta utilizada por la es-cuela de economía austriaca, especialmente en la teoría del ciclo económico. El objetivo de este trabajo es mostrar cómo también pueden ser empleados para analizar las fluctuaciones de los mercados de valores, añadiendo los activos financieros al modelo.

scholarly journals On Hayekian Triangles

2021 ◽  
pp. 39-142
Author(s):  
William Barnett II ◽  
Walter Block
Keyword(s):  
Business Cycle ◽  
Economic Thought ◽  
Austrian Economics ◽  
Business Cycle Theory ◽  
Geometrical Figure ◽  
Capital Theory ◽  
Austrian Business Cycle Theory ◽  
Palabras Clave ◽  
Austrian Business Cycle ◽  
History Of

The triangle is an integral part of the history of economic thought. It has been used by writers such as Jevons (1871), Taussig (1896), Wicksell (1934, 1969) to illustrate and to help us understand capital theory. Since Hayek (1931) this geometrical figure has been used as a basic pedagogical device to explain the Austrian Business Cycle Theory (ABCT). The purpose of the present paper is to argue that the triangle is highly problematic, if not fatally flawed, and that if ABCT is to be made intelligible this tool of analysis must be either completely jettisoned, or heavily supplemented with a list (see below) of its shortcomings. Moreover in some ways the triangle has been responsible for the relative lack of development of ABCT for over a half century. Key words: Austrian economics, business cycle theory, praxeology, economic geometry, triangles. Clasificación JEL: E3, E32. Resumen: El triángulo es una parte integral de la historia del pensamiento económico. Ha sido utilizado por escritores como Jevons (1871), Taussig (1896), Wicksell (1934, 1969) para ilustrar y ayudarnos a comprender la teoría del capital. Desde Hayek (1931) esta figura geométrica se ha utilizado como un instrumento pedagógico básico para explicar la teoría austriaca del ciclo económico. El propósito de este trabajo es sostener que el triángulo es altamente problemático, sino fatalmente defectuoso, por lo que si deseamos que la teoría austriaca del ciclo económico sea comprendida debemos desecharlo comple-tamente, o complementarlo fuertemente con una lista de sus limitaciones. Además, en algunos casos el triángulo ha sido responsable de la relativa falta de desarrollo de la teoría austriaca del ciclo durante un periodo de medio siglo. Palabras clave: Economía austriaca, teoría del ciclo económico, praxeología, geometría económica, triángulos.

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