Credit Cycles in a Neo-Austrian Economy

27 Pages Posted: 23 Nov 2005

See all articles by Eloisa Campioni

Eloisa Campioni

University of Rome Tor Vergata - Dept. of Economics and Finance

Andrea Attar

Toulouse School of Economics; University of Roma Tor Vergata

Abstract

This paper discusses the relationship between firms' access to credit market and business fluctuations in a sequential Neo-Austrian economy. Existence of cycles reflects a fundamental distortion in the intertemporal structure of production, that is a lack of coordination between utilization of productive capacity and construction of new machines. The role of credit market institutions is to sustain viability of the economy along an out-of-equilibrium transition. Allowing for a high degree of price flexibility turns out not to be a general response to boosts in capital accumulation and employment. When we focus on an irreversible, off-equilibrium dynamics the coordination of policy interventions becomes a relevant tool to govern fluctuations.

Keywords: Production processes, Cycles, Complex dynamics

JEL Classification: E23, E32, E37, E44

Suggested Citation

Campioni, Eloisa and Attar, Andrea, Credit Cycles in a Neo-Austrian Economy. Structural Change and Economic Dynamics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=850864

Eloisa Campioni (Contact Author)

University of Rome Tor Vergata - Dept. of Economics and Finance ( email )

Italy

Andrea Attar

Toulouse School of Economics

21, allée de Brienne
Toulouse, F 31000
France
+33 5 61128578 (Phone)

University of Roma Tor Vergata ( email )

2 Via Columbia
00100 Rome
Italy

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