Introduction

Pavel Potuzak
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Pavel Potuzak: Prague University of Economics and Business

Chapter Chapter 1 in Austrian Theory of Capital and Business Cycle, 2022, pp 1-4 from Springer

Abstract: Abstract The core of the Austrian theories of capital and the business cycle is the allocation of factors of production over time, which can be either sustainable or unsustainable. Sustainable allocation is associated with real economic growth that can be driven by lower time preference in the society, or by technological progress. Unsustainable allocation is caused by monetary forces coming either from the central bank and commercial banks on the supply side or from changing liquidity preference on the demand side. The initial dynamics of sustainable and unsustainable paths are very similar. However, money-induced economic booms end in misallocation of resources and painful recessions. This book develops a graphical apparatus that separates these two cases. This approach can complement traditional textual explanations of Austrian theory, as well as the standard Hayek triangles.

Keywords: Austrian business cycle; Austrian capital theory; Heterogenous capital; Natural interest rate; Time preference (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-18728-5_1

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DOI: 10.1007/978-3-031-18728-5_1

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