The Upper Turning Point in the Austrian Business Cycle Theory

This paper studies a scenario - one of the six problems with Austrian Business Cycle theory raised by Hummel (1979) - that the ABCT literature has paid little attention. Will a constant rate of credit expansion necessarily lead to a boom-bust cycle? We conclude that this scenario has two potential outcomes, (1) a change in money demand brings the economy back towards equilibrium or (2) the economy will shift to sub-optimal but still sustainable path. We identify capital heterogeneity effects and the Ricardo effect as distinctly Austrian explanations for an upper turning point, even in a fiat money regime

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Year of publication:	2019
Authors:	Evans, Anthony J.
Other Persons:	Cachanosky, Nicolás (contributor) ; Thorpe, Robert (contributor)
Publisher:	[2019]: [S.l.] : SSRN
Subject:	Konjunkturtheorie \| Business cycle theory \| Österreichische Schule \| Austrian economics \| Österreich \| Austria \| Konjunktur \| Business cycle \| Frühindikator \| Leading indicator \| Schätzung \| Estimation \| Konjunktureller Wendepunkt \| Business cycle turning point

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