Tyler Cowen on Austrian Business Cycle Theory: A Critique
New Perspectives on Political Economy, Vol. 2, No. 2, pp. 26-85, 2006
60 Pages Posted: 8 Jul 2011
Date Written: July 6, 2011
Cowen (1997) criticizes Austrian Business Cycle Theory (ABCT) on eight grounds: 1. systematic errors; 2. inflation volatility; 3. confusion of inflation and savings; 4. confusion of inflation and investment; 5. real vs. nominal rates of interest; 6. interest rate information; 7. investor interpretation of interest rates; 8. validation of inflationary investments. The present paper rejects all of these claims, and defends ABCT against them.
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