Austrian Business Cycle Theory - Influence


The Austrian explanation of the business cycle varies significantly from the current mainstream understanding of business cycles, and is generally rejected by mainstream economists.

According to Nicholas Kaldor, Hayek's work on the Austrian business cycle theory had at first "fascinated the academic world of economists," but attempts to fill in the gaps in theory led to the gaps appearing "larger, instead of smaller," until ultimately "one was driven to the conclusion that the basic hypothesis of the theory, that scarcity of capital causes crises, must be wrong." After 1941, Hayek abandoned his research in macroeconomics altogether, focusing instead on issues of the economics of information, political philosophy, and the theory of law.

Lionel Robbins, who had embraced the Austrian theory of the business cycle in The Great Depression (1934), later regretted having written that book and accepted many of the Keynesian counterarguments.

The late-2000s financial crisis has resulted in a revival of interest in the Austrian business cycle theory, but has also resulted in a revival of interest of theories more critical of Austrian theory, such as those promoted by Keynesian economics. According to Austrian School supporters, over 25 Austrian School economists are publicly on record as having accurately predicted a housing bubble prior to new home prices reaching their peak in March 2007. Austrian economics received media attention after Congressman and Presidential candidate Ron Paul, was praised by MSNBC's Joe Scarborough for predicting the housing bubble and financial crisis and Paul subsequently appeared on Scarborough's 'Morning Joe' show and credited his understanding of Austrian economics for predicting the financial crisis.

Read more about this topic:  Austrian Business Cycle Theory

Other articles related to "influence":

Tarzan - Character Biography - Legacy
... was Jane Goodall, who describes the Tarzan series as having a major influence on her childhood ... Rudyard Kipling's Mowgli has been cited as a major influence on Edgar Rice Burroughs' creation of Tarzan ... Mowgli was also an influence for a number of other "wild boy" characters ...
New York Dolls - History - Influence
... The New York Dolls were first and foremost a major influence on the rock music scene in New York City, having accumulated a devoted cult following during their career ...
Jean Giraud - Influence and Legacy
... around the world have cited Giraud as an influence on their work ... had a consolidated style so I couldn't use its influence to enrich my drawing ... I directed NausicaƤ under Moebius's influence ...

Famous quotes containing the word influence:

    If the dignity as well as the prestige and influence of the United States are not to be wholly sacrificed, we must protect those who, in foreign ports, display the flag or wear the colors of this Government against insult, brutality, and death, inflicted in resentment of the acts of their Government, and not for any fault of their own.
    Benjamin Harrison (1833–1901)

    My administration is pledged to follow the policies of Mr. Roosevelt in this regard, and while that pledge does not involve me in any obligation to carry them out unless I have Congressional authority to do so, it does require that I take every step and exert every legislative influence upon Congress to enact the legislation which shall best subserve the purposes indicated.
    William Howard Taft (1857–1930)

    The higher the state of civilization, the more completely do the actions of one member of the social body influence all the rest, and the less possible is it for any one man to do a wrong thing without interfering, more or less, with the freedom of all his fellow-citizens.
    Thomas Henry Huxley (1825–95)