The Upper Turning Point in the Austrian Business Cycle Theory

16 Pages Posted: 21 Mar 2018 Last revised: 2 Nov 2018

See all articles by Anthony J. Evans

Anthony J. Evans

ESCP Europe; ESCP Europe - Department of Economics

Nicolas Cachanosky

Metropolitan State University of Denver; American Institute for Economic Research

Robert Thorpe

Independent

Date Written: March 20, 2018

Abstract

This paper studies a scenario - one of the six problems with Austrian Business Cycle theory raised by Hummel (1979) - that the ABCT literature has paid little attention. Will a constant rate of credit expansion necessarily lead to a boom-bust cycle? We conclude that this scenario has two potential outcomes, (1) a change in money demand brings the economy back towards equilibrium or (2) the economy will shift to sub-optimal but still sustainable path. We identify capital heterogeneity effects and the Ricardo effect as distinctly Austrian explanations for an upper turning point, even in a fiat money regime.

Keywords: Business Cycles, Austrian Business Cycle, Turning Point

JEL Classification: B53, E32

Suggested Citation

Evans, Anthony J. and Cachanosky, Nicolas and Thorpe, Robert, The Upper Turning Point in the Austrian Business Cycle Theory (March 20, 2018). Available at SSRN: https://ssrn.com/abstract=3145284 or http://dx.doi.org/10.2139/ssrn.3145284

Anthony J. Evans (Contact Author)

ESCP Europe ( email )

79 Avenue de la Republique
Paris, 75011
France

HOME PAGE: http://anthonyjevans.com

ESCP Europe - Department of Economics ( email )

United Kingdom

HOME PAGE: http://anthonyjevans.com

Nicolas Cachanosky

Metropolitan State University of Denver ( email )

Student Success Building
890 Auraria Pkwy #310
Denver, CO 80217
United States

HOME PAGE: http://www.ncachanosky.edu

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

Robert Thorpe

Independent ( email )

Register to save articles to
your library

Register

Paper statistics

Downloads
57
rank
353,449
Abstract Views
322
PlumX Metrics