In this paper I offer a novel interpretation of the challenges posed by ‘constitutional drift' — the tendency for de facto political procedures to alter when these procedures no longer are incentive-compatible for those wielding political power — for sound governance institutions, with...

The New Austrian (also called Neo-Mengerian) paradigm emphasizes the importance of nonequilibrium and emergent processes in explaining the social world. In this paper I analyze macroeconomic policy from a New Austrian perspective. I define macroeconomic policy broadly, encompassing not only...

We use a model in which media of exchange are essential to examine the role of liquidity and monetary policy on production and investment decisions in which time is an important element. Specifically, we consider the effects of monetary policy on the length of production time and entry and exit...

This paper analyses the renewed scholarly interest in the Mises-Hayek, or “Austrian,” theory of the business cycle since the 2008 financial crisis. Understandably, the economics profession has broadened its search for the crises's explanation beyond the standard DSGE framework. Austrian...

Of the leading versions of lender of last resort policy, which is to be preferred in a world of realistic incentive and information imperfections? The three most prominent versions of lender of last resort policy are: the Classical system of central bank lending on good collateral at a penalty...

We contribute to the post-crisis literature on macroeconomic stability by arguing that polycentric banking systems can better achieve stability than monocentric systems. Building on the theories of E. Ostrom, we engage the literature on free banking systems to show that these systems met the...

This paper compares various proposals for monetary policy rules according to the standard of political economy. It first presents an argument for why rules-based monetary policy is preferable to discretionary policy. Next it discusses at a general level two kinds of rules: those that can be...

I develop a robust political economy of bureaucracy by highlighting the conditions necessary for hierarchical administrative bodies to govern protectively and productively, but not predatorily. These conditions are residual claimancy and jurisdictional competition. I make this argument by...

Since Hayek's pioneering work in the 1930's, the Austrian business cycle theory has been presented as a disequilibrium theory populated by less-than-perfectly rational agents. In contrast, we maintain that (1) the Austrian business cycle theory is consistent with rational expectations and (2)...

The purpose of this paper is to analyze the political philosophy of John C. Calhoun from the perspective of Virginia Political Economy. Specifically, this paper argues that Calhoun's theory of the concurrent majority offers a way of operationalizing the "generality norm" of Buchanan and...