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Austrian Macroeconomics in Search of Its Uniqueness

25 Pages Posted: 14 Jul 2017  

William J. Luther

Kenyon College

J.P. McElyea

comScore, Inc.

Date Written: July 7, 2017

Abstract

We consider the essential features of an Austrian macroeconomic model and then ask whether these features are unique. We argue that the temporal aspect of the structure of production is not an essential feature. Malinvestments in any dimension (e.g., time, geography, type, etc.) can generate the predicted boom-bust cycle so long as there are costs to reallocation. However, the view that nominal shocks have long term consequences because costs are incurred to remedy past mistakes is not uniquely Austrian. In particular, we note similarities with the New Keynesian notion of hysteresis.

Keywords: Austrian, Austrian business cycle, Austrian macroeconomics, business cycle, macroeconomics, macroeconomic fluctuation

JEL Classification: B53, E10, E14, E30, E32

Suggested Citation

Luther, William J. and McElyea, J.P., Austrian Macroeconomics in Search of Its Uniqueness (July 7, 2017). Available at SSRN: https://ssrn.com/abstract=2998919

William J. Luther (Contact Author)

Kenyon College ( email )

Gambier, OH 43022
United States

HOME PAGE: http://www.wluther.com

J.P. McElyea

comScore, Inc. ( email )

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