Further Dynamics of the Interest Rate in Austrian Theory

Pavel Potuzak
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Pavel Potuzak: Prague University of Economics and Business

Chapter Chapter 7 in Austrian Theory of Capital and Business Cycle, 2022, pp 117-132 from Springer

Abstract: Abstract This chapter analyses a positive technological shock that leads to greater demand for credit, which is consequently accommodated by the banking system. Representative balance sheets of commercial banks are introduced along with two fundamental responses of banks to the increased demand for credit. The pattern of the Austrian business cycle is then presented in the model. The emphasis is put on the elastic money supply and its endogenous character. This section also introduces unstable demand for money as a possible source of economic fluctuations.

Keywords: Austrian business cycle; Endogenous money supply; Interest rate gap; Demand for money (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_7

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DOI: 10.1007/978-3-031-18728-5_7

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