Austrian Macroeconomics in Search of Its Uniqueness

28 Pages Posted: 14 Jul 2017 Last revised: 5 Jan 2018

See all articles by William J. Luther

William J. Luther

Florida Atlantic University; American Institute for Economic Research

J.P. McElyea

comScore, Inc.

Date Written: January 2, 2018


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 (January 2, 2018). AIER Sound Money Project Working Paper No. 2018-05, Available at SSRN: or

William J. Luther (Contact Author)

Florida Atlantic University ( email )

777 Glades Road
Boca Raton, FL 33431
United States


American Institute for Economic Research ( email )

PO Box 1000
Great Barrington, MA 01230
United States


J.P. McElyea

comScore, Inc. ( email )

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