Financial Foundations of Austrian Business Cycle Theory

2016. Advances in Austrian Economics, Vol. 20, pp. 15-44

36 Pages Posted: 20 Jun 2014 Last revised: 15 Feb 2020

See all articles by Nicolas Cachanosky

Nicolas Cachanosky

Metropolitan State University of Denver; American Institute for Economic Research

Peter Lewin

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

Date Written: June 18, 2014

Abstract

In this paper we study financial foundations of Austrian business cycle theory (ABCT). By doing this we (1) clarify ambiguous and controversial concepts like roundaboutness and average period of production, (2) we show that it has strong financial foundations (consistent with its microeconomic foundations), and (3) we offer examples of how to use the flexibility of this approach to apply ABCT to different contexts and scenarios.

Keywords: Macaulay duration, modified duration, Austrian business cycles, average period of production, roundaboutness, economic value added, EVA(R)

JEL Classification: B53, E23, E30

Suggested Citation

Cachanosky, Nicolas and Lewin, Peter, Financial Foundations of Austrian Business Cycle Theory (June 18, 2014). 2016. Advances in Austrian Economics, Vol. 20, pp. 15-44, Available at SSRN: https://ssrn.com/abstract=2456766 or http://dx.doi.org/10.2139/ssrn.2456766

Nicolas Cachanosky (Contact Author)

Metropolitan State University of Denver ( email )

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HOME PAGE: http://www.ncachanosky.edu

American Institute for Economic Research

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Peter Lewin

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics ( email )

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Richardson, TX 75083
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