Errors in Time as Causes of Economic Fluctuations: An Introduction

The role of expectations and of their disappointment in determining economic fluctuations was first studied by the great economists of the 1930s. Amongst them is Marco Fanno. Fanno’s most popular contributions on this topic are his 1931 article Cicli di produzione, cicli del credito e fluttuazioni industriali and his 1947 [1956] book La teoria delle fluttuazioni economiche. Relatively little known is his 1933 article Irrtümer in der Zeit als Ursachen wirtschaftlicher Schwankungen published in German in Zeitschrift für Nationalökonomie. The present article is an introduction to the English translation (published for the first time in the current issue of this journal) and of the Italian translation (available from the website of this journal) of the 1933 article. The aim of this introduction is to help readers to determine the essential similarities and some important differences between the 1931 article and the less known article of 1933. The most relevant of these differences is the greater attention devoted in the latter article to errors in time (an expression equivalent to the disappointment of expectations that is found in modern literature) and to the interactions between these errors, the origin of fluctuations and the changes in the time structure of production. Our introduction endeavours to highlight the strengths and weaknesses of the 1933 article considered both on its own and in relation to the 1931 article from which it was derived. The relations between the 1933 article, translated here, and the macroeconomic theory that was developed in the 1930s and in the following decades will be examined in a different paper.