25 May 2009

Correcting Quiggan on Austrian Business Cycle Theory

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In today’s Mises Daily I defend Austria from the Australian. An excerpt:

I am not here to tell you the Mises-Hayek theory of the business cycle is a work of art that has no flaws. If I said that, then I would be living up to Quiggin’s caricature. What I will say is that the Austrian explanation of the boom-bust cycle makes more sense than any other explanation I’ve seen. In particular, most rival schools of thought say that the way to fix an economy plagued by overconsumption and reckless lending is to have the government borrow obscene amounts of money and to have politicians take over financial accounting. And it’s the Austrians who allegedly cling to dogma in the face of overwhelming counterevidence?

UPDATE: Quiggan responds on the Mises blog; I give a half-serious answer.

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