The business cycles theories of Wicksell (1898), Schumpeter (1912), Mises (1912), Hayek (1929, 1935) and Minsky (1986, 1992) explain business cycles by distorted prices on capital markets, buoyant credit expansion and overinvestment. The exuberance during the boom endogenously causes the...

This paper analyzes conditions for determinacy in a new Keynesian model with endogenous growth. Endogenous growth shrinks the determinacy region considerably. Complying with the Taylor principle is not sufficient for determinacy, which decreases in the spillovers from actual on potential output....

One of the most robust stylized facts in macroeconomics is the forecasting power of the term spread for future real activity. The economic rationale for this forecasting power usually appeals to expectations of future interest rates, which affect the slope of the term structure. In this paper,...

The article starts with a brief description of Mises’ monetary theory, with emphasis on the Misesian differentiation of two kinds of credit: commodity and circulation credit, and with the description of the impact of circulation credit expansion on the business cycle. Further on it is...

One of the most robust stylized facts in macroeconomics is the forecasting power of the term spread for future real activity. The economic rationale for this forecasting power usually appeals to expectations of future interest rates, which affect the slope of the term structure. In this paper,...

During the last 25 years, the stock market in the US has been strongly pro-cyclical in the presence of a counter-cyclical monetary policy. In this paper, we use an endogenous business cycle model to explore the factors contributing to a pro-cyclical stock market. A dynamic expectation structure...

Salter and Luther (2016) argue that the Austrian theory of the business cycle (ABCT) can be interpreted as one where consumers and entrepreneurs with rational expectations make erroneous investment decisions driven by misperceptions regarding real vs. nominal shocks. Although we are sympathetic...

During the last 25 years, the stock market in the US has been strongly pro-cyclical in the presence of a counter-cyclical monetary policy. In this paper, we use an endogenous business cycle model to explore the factors contributing to a pro-cyclical stock market. A dynamic expectation structure...

There is no such thing as a 'real' economy. The task, therefore, is to consistently reconstruct the fluctuations of employment and output from the interactions of real and nominal variables. The present paper does exactly this. No nonempirical concepts like utility, equilibrium, rationality,...

This paper examines the effectiveness of inflation targeting to stabilize the real economy of the advanced countries where inflation targeting was adopted in the early 1990s. This paper employs the monetary business cycle accounting methodology recently developed by Šustek (2011) which is an...