Economics Questions

Re: Business Cycle Theories

Niccolò — Fri, 28 Sep 2007 05:50:59 GMT

Most modern business cycle theories aren't so much theories about the business cycle as they are theories about what causes the market to go into recession (like political business cycle, cycles caused by a drop in demand, cycles caused by etc.)

They really aren't totally incompatible with ABCT which is why I'm surprised more Austrians don't attempt to find more in common with other perspectives.

Re: Business Cycle Theories

Webster — Thu, 27 Sep 2007 15:36:00 GMT

I saw one very interesting one in a book entitled something along the lines of Problems in Contemporary Economics from 1920 that expounded on the animal spirits approach. Essentially, when the economy is booming the price of expansion for businesses is high and the benefits of expansion are low (assuming that the economy will go into a recession in the near future). On the other hand when the economy is in a recession the price of expansion is low and the benefits are high. Consequently, once businesses expect a recession they will cut expansion, creating a trickle-through effect that reduces demand in all markets, causing a recession. Once in the recession, businesses will begin expansion as soon as they expect an expansion of the economy, and that will trickle through and increase AD, bringing the economy back. He also made an argument over interest rates, but I forgot precisely the way it worked. I do not know enough about the Austrian theory to tell how different they are, but if you are interested I could try to get the title of the book.

Re: Business Cycle Theories

Inquisitor — Thu, 27 Sep 2007 13:15:51 GMT

The New Classicist "Real Business Cycle" is always a good candidate, especially given the attention it has been receiving lately.

Business Cycle Theories

earlgrey — Thu, 27 Sep 2007 07:12:47 GMT

I have an essay idea, but in its present form it requires 3 depression or business cycle theories. I have Austrian (of course) and Keynesian (another duh), but I can't come up with another that would be meaningfully different from Keynesian. I thought of Marxian, but my essay applies them to the real world, and I don't think Marxian theory has enough substance to do so (correct me if I'm wrong).

Any ideas?