Taxes and the Structure of Production

Journal of Public Finance and Public Choice, No. 2-3, 1998

8 Pages Posted: 11 Jul 2011

See all articles by Walter E. Block

Walter E. Block

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business

Date Written: July 7, 2011

Abstract

In Austrian theory, the business cycle is caused by expansive monetary policy, which artificially lowers the interest rate below equilibrium rates, necessarily lengthening the structure of production. Can tax alterations also cause an Ausman business cycle? Only if they affect time preference rates, the determinant of the shape of the Hayekian triangle. It is the contention of this paper that changes in taxes possibly can (but need not) impact time preference rates. Thus there may be a causal relation between fiscal policy and the business cycle, but this is not a necessary connection, as there is between monetary policy and the business cycle. This is contentious, since some Austrians argue that there is a praxeological link between tax policy and time preference rates.

Suggested Citation

Block, Walter E., Taxes and the Structure of Production (July 7, 2011). Journal of Public Finance and Public Choice, No. 2-3, 1998. Available at SSRN: https://ssrn.com/abstract=1881079

Walter E. Block (Contact Author)

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business ( email )

6363 St. Charles Avenue
Box 15, Miller 321
New Orleans, LA 70118
United States
(504) 864-7944 (Phone)
(504) 864-7970 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
27
Abstract Views
311
PlumX Metrics