What Austrian business cycle theory does and does not claim as true


Last month the FT’s Martin Wolf asked a simple question, “Does Austrian economics understand financial crises better than other schools of thought?” After admitting that neo-classical models did “a poor job in predicting the crisis and in suggesting what should be done in response” , he points out that the following Austrian arguments have held up well: “inflation-targeting is inherently destabilising; that fractional reserve banking creates unmanageable credit booms; and that the resulting global ‘malinvestment’ explains the subsequent financial crash.”

Shadow Monetary Policy Committee

Anthony J. Evans is Associate Professor of Economics at ESCP Europe Business School. His research interests are in corporate entrepreneurship, monetary theory, and transitional markets. He has published in a range of academic and trade journals and is the co-author of The Neoliberal Revolution in Eastern Europe (Edward Elgar, 2009). He has conducted policy research for the Conservative Party and European Investment Fund, as well as managing consultancy projects for several corporate sponsors. He teaches Executive MBA classes across Europe and has written a number of Harvard-style cases. His work has been covered by most broadsheet newspapers and he has appeared on Newsnight and the BBC World Service. Anthony received his MA and PhD in Economics from George Mason University, USA, and a BA (Hons) from the University of Liverpool, UK.



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