Austrian Economics, Market Process, and the EVA(R) Framework
Prepared for the Free Market Institute’s symposium on Austrian Perspectives on Business Valuation for the Journal of Business Valuation and Economic Loss Analysis, 2016
23 Pages Posted: 23 Jun 2016 Last revised: 15 Jun 2018
Date Written: June 20, 2016
In this paper I present a financial framework, known as Economic Value Added or EVA®, used to value firms and apply it to topics highlighted in the Austrian literature. In particular I contrast the market process emphasize in the Austrian literature with the neoclassical firm profit maximization and the role of Kirzner’s entrepreneurial alertness. Then I show how these micro topics can be aggregated into macro issues such as the Cantillon Effect, an aggregate average period of production, and the impact of country risk into value creation.
Keywords: Austrian Economics, Market Process, EVA(R), Economic Value Added, Entrepreneurial Alertness, Microfoundations
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