Financial Foundations of Austrian Business Cycle Theory
2016. Advances in Austrian Economics, Vol. 20, pp. 15-44
36 Pages Posted: 20 Jun 2014 Last revised: 15 Feb 2020
Date Written: June 18, 2014
In this paper we study financial foundations of Austrian business cycle theory (ABCT). By doing this we (1) clarify ambiguous and controversial concepts like roundaboutness and average period of production, (2) we show that it has strong financial foundations (consistent with its microeconomic foundations), and (3) we offer examples of how to use the flexibility of this approach to apply ABCT to different contexts and scenarios.
Keywords: Macaulay duration, modified duration, Austrian business cycles, average period of production, roundaboutness, economic value added, EVA(R)
JEL Classification: B53, E23, E30
Suggested Citation: Suggested Citation