Cantillon and Ricardo effects: Hayek's contributions to business cycle theory

Harald Hagemann and Hans-Michael Trautwein

The European Journal of the History of Economic Thought, 1998, vol. 5, issue 2, 292-316

Abstract: The distinctive line of argument in Hayek' business cycle theory can be characterized as a combination of the Cantillon effect monetary expansion on the price structure and the Ricardo effect of a shortage of consumption goods on the production of investment goods. This paper compares the original ideas of Cantillon and Ricardo with their adaptation and combination by Hayek. The differences help to expose fundamental problems in Hayek' theory and, more generally, in projects of integrating money and the business-cycle phenomenon with Walrasian general equilibrium theory.

Keywords: Hayek; Cantillon; Ricardo; business cycle; money supply; structure of pro-duction (search for similar items in EconPapers)
Date: 1998
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DOI: 10.1080/10427719800000022

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