On Hummel on Austrian Business Cycle Theory
Reason Papers, Vol. 30, pp. 59-90, Fall 2008
32 Pages Posted: 8 Jul 2011
Date Written: July 6, 2011
Jeffrey Rogers Hummel criticizes Austrian Business Cycle Theory (ABCT), and it is our intent in the present article to reply to his criticisms, defending this viewpoint against the difficulties he raises with it. Hummel sees six separate problems with the Austrian or praxeological analysis of the business cycle, and we shall comment on each of them. To wit, following Hummel’s outline, we devote Section 2 to Asymmetry, 3 to Definitions of the Money Stock, 4 to Net Investment, 5 to Deflation, 6 to the Constant Rate of Credit Expansion, and 7 to International Aspects of the ABCT. We conclude in Section 8. Since Hummel prefaces his remarks with his “fundamental assumption,” we shall follow him in that regard here.
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