Thursday, September 23, 2010

Empirical Austrian Economics, Part 3 shares a paper testing ABCT's explanatory power for the Norwegian business cycle by Håkon Bjerkenes, Håkon Kiil, and Paal Anker-Nilssen.

I haven't read it yet, but I'm going to try to go over it. It's quite long and it's got time-series econometrics that I haven't seen or used for five years, but I'll do my best. Skimming it, it looks like it draws heavily from Garrison. If anyone else takes the time to read it and wants to share their reactions I'd be interested in hearing them.

I think my project on empirically testing ABCT is going to start lurching forward, but of course who knows where it will go.

This is the abstract:

"This paper reviews the key elements of Austrian macroeconomics and aims to find out whether the Austrian business cycle theory can explain causes to Norwegian business cycles between 1979 and 2009. The Austrian school suggests that monetary interventions disturb the term structure of interest rates. This causes the capital structure to change which accounts for fluctuations of the business cycle. Credit-induced expansions with unchanged time-preferences create unsustainable growth which inevitably turns the economy into recession. Quarterly time series data of base money supply, interest rates, investment and private consumption expenditure, employment, prices, and aggregate output are analysed in order to find relationships with assumptions of causality. Empirical evidence show that Austrian business cycle theory can help explain fluctuations in aggregate output for Norway."


  1. Interesting, this is from my school.

    Pretty busy with my own work, but might get a chance to flip through the thesis over the w/end. I'll ask some of the guys in the financial economics stream if they know the authors...

  2. It is also vital to remember that you must examine all monetary expansion, official or unofficial. You can't just assume only official numbers are real and the rest is the demon fear.


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