Tuesday, 12 March 2013

Monetary Disequilibrium Theory and Business Cycles

Monetary disequilibrium theory has some common ground with Austrian economics, but there is substantial disagreement regarding the analysis of business cycles. While monetary disequilibrium theory does include some consideration of the market process so important in Austrian theory, at its core lies a view of equilibrium as essentially a static state. This incorrect definition has led to an inadequate explanation of the business cycle in the monetary disequilibrium tradition. The Austrian theory of the business cycle examines business cycles from within the context of the entire economic process and thus, far from being overly specific, is the only theory that provides a complete explanation of that phenomenon.
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