Hayekian Credit Booms

by Andreas Hoffmann Currently there is an interesting discussion in the blogosphere on how it is possible that in Hayek’s Prices and Production framework consumption and investment can increase at the same time. In my opinion they cannot, or only very slightly, but this is not a problem! Because, 1) the explanation is not one of the … Continue reading Hayekian Credit Booms

Heterogeneous Labor

by Jerry O’Driscoll   In the September 4th issue of the Wall Street Journal, Jon Hilsenrath chronicles the debate over the reasons for persistently high unemployment.  What is being described is the problem of heterogeneous labor. Labor, like capital goods, is specialized and specific to certain occupations. When those occupations disappear in recession, the next best alternative … Continue reading Heterogeneous Labor

Tyler Cowen’s “Risk and Business Cycles”

by Mario Rizzo I am happy to report that Tyler Cowen's book, Risk and Business Cycles: New and Old Austrian Perspectives  is now available, as of July 15th, in a reasonably-priced paperback edition from Routledge. (I am sure that Amazon will be making it available soon.) This is not an orthodox Austrian approach. In fact, Cowen criticizes that version. However, … Continue reading Tyler Cowen’s “Risk and Business Cycles”

Understanding Efficient Markets

By Chidem Kurdas Headline topics like derivatives are part of the larger issue of how markets function.  About this big question there’s been profound confusion in the past two years.  Peter Boettke's article in the Winter 2010 issue of the Independent Review clarifies the muddle. A particular mathematical interpretation of what an efficient market is … Continue reading Understanding Efficient Markets

Bleg: What are the Predictions of Austrian Cycle Theory?

by Mario Rizzo If you were going to try to adduce evidence with regard to the Mises-Hayek-Garrison "Austrian Business Cycle Theory" what would you expect to see in the expansion, upper turning point and perhaps in the recession itself? Specifically, what would you expect to see in this most recent episode, the so-called Great Recession? … Continue reading Bleg: What are the Predictions of Austrian Cycle Theory?

Hayek after 35 Years

by Jerry O’Driscoll   Today I reread F. A. Hayek’s Nobel Lecture, “The Pretence of Knowledge.”  Hayek was awarded the Nobel Memorial Prize in 1974 and delivered his lecture on December 11, 1974. I was amazed at how modern it was, and appropriate once again for the times.   The 1970s were terrible times: stop-go demand management … Continue reading Hayek after 35 Years

Austro-Wicksellian Theory of the Business Cycle: An Informed View

by Mario Rizzo There has been recent discussion in the blogosphere of the so-called Austrian Business Cycle Theory (ABCT). (We must not forget to give the Swedish economist Knut Wicksell credit as well.) Some of it is interesting (mostly because of the comments) but much of it is ill-informed since the bloggers don't like to read … Continue reading Austro-Wicksellian Theory of the Business Cycle: An Informed View

Bleeding the Economy

by Roger Koppl At the Cobden Centre's website (and here), Steve Baker discusses recent Fed signals in the context of Big Players theory.  The more active the Fed (or other central bank), the greater the fraction of entrepreneurial attention devoted to Fed watching rather than productive activity.  As Baker says, “traders must pay attention to the … Continue reading Bleeding the Economy

Falling Wage Rates

by Jerry O’Driscoll   In today’s Wall Street Journal, there is an article titled “Returning Workers Face Steep Pay Cuts.”  The article cites research by Kenneth Couch of the University of Connecticut that returning workers are taking on average a 40% pay cut from their old jobs.  This is first and foremost a personal tragedy for … Continue reading Falling Wage Rates