Microfoundations and Macroeconomics

Horwitz, Steven

doi:10.4324/9780203456309

Cited by 163 publications

(44 citation statements)

References 56 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This paper builds on the insights of Shah (1997) who first developed the contrasts and similarities between the New Keynesian and Austrian business cycle theories, as well as extending the work of Lewin (1997aLewin ( , 1999 and Horwitz (2000). Because this paper discusses a formal model of a kind which is uncommon among the Austrian school, it attempts to answer Spadaro's (1978) call for selective adoption of rigorous formalism.…”

Section: Introductionmentioning

confidence: 94%

Accounting for the business cycle: Nominal rigidities, factor heterogeneity, and Austrian capital theory

Mulligan

2006

Rev Austrian Econ

View full text Add to dashboard Cite

An Austrian interpretation of the New Keynesian small menu cost model of the business cycle is proposed. Austrian and New Keynesian business cycle theories share the feature that the cycle is generated by rigidities which prevent the economy from adapting instantaneously to changing conditions. Austrian business cycle theory is capital-based, focusing on credit expansion which artificially lowers interest rates and causes an investment boom and unsustainable business expansion. In contrast, the New Keynesian small menu cost model of the business cycle is based on nominal rigidities which prevent markets from clearing. Small menu costs introduce dichotomous behavior, where firms find it locally optimal to avoid instantaneous output price adjustments in the face of the cost, but this local optimum results in economy-wide output and employment fluctuations which are much greater in relative magnitude. The small menu cost model of the business cycle is extended and reinterpreted in light of Austrian business cycle theory with heterogeneous, multiply-specific capital, thus providing a rigorous formalization of the Austrian business cycle. The Austrian interpretation of this New Keynesian model fortuitously addresses several of its shortcomings. Copyright Springer Science + Business Media, LLC 2006Austrian business cycle theory, New Keynesian small menu cost model, Hayekian triangle,

show abstract

Section: Introductionmentioning

confidence: 94%

Accounting for the business cycle: Nominal rigidities, factor heterogeneity, and Austrian capital theory

Mulligan

2006

Rev Austrian Econ

View full text Add to dashboard Cite

show abstract

“…Mathematization is generally viewed as alien to the Austrian economics, although there were trials to incorporate it into the body of this school, made notably by von Neumann & Morgenstern (1944) and Horwitz (2000). However, the membership of von Neumann and Morgenstern in the current of Austrian school is disputable.…”

Section: The Resolutionmentioning

confidence: 99%

Ecumenical foundations? On the coexistence of Austrian and neoclassical views on utility

Senderski

2014

IJPEE

View full text Add to dashboard Cite

Note on terminologyAlthough it is sensible to refer to the Austrian school and the Austrian economists with a small rather than a capital letter (as it denotes the affiliation to a particular current, not the nationality), the prevailing consensus is to apply capital "A" with "Austrian", regardless of its actual usage. The author respects this consensus, even though he does not agree with it.2 Abstract Utility has always been a debatable concept, with many competing interpretations. The Austrian school and the neoclassical school, however broad these categories may seem, have made the most substantial and, by the same token, the most contrasting contributions to the theory of value. The paper's goal is not to adjudicate past arguments or observe the evolution of the theory, but rather to resolve contemporary misunderstandings. The references are made to such trouble spots as subjectivism vs. objectivism, cardinality vs. ordinality, and mathematical formalism vs. verbal formalism. Both schools entrenched themselves in their views long ago. Nevertheless, this paper shows that discussing utility on common ground and on the basis of shared presumptions is not necessarily the melody of the future. The paper is concluded with recommendations on how the current dissent may be attenuated.

show abstract

“…Credit injection, moreover, does not operate as some uniformly-spread liquid, but comes in lumps to particular enterprises (Horwitz 2000). Within this alternative frame of reference, a credit expansion may well facilitate some firms that prove to be successful, as well as exerting subsequent negative consequences.…”

Section: Comparison #2: Austrian-style Macro Theorymentioning

confidence: 99%

Change within Permanence: Time and the Bivalent Logic of Economic Analysis

Wagner

2010

SSRN Journal

View full text Add to dashboard Cite

The logic of economic inquiry requires two distinct research programs. One program treats economic life in terms of invariant formal categories across time and place. The other program treats the continual of novelty and turbulence through time through human interaction. These programs are not commensurable: one can't be reduced to the other. The former program must be conveyed by a theory of equilibrium; the latter program requires a processbased theory of emergent phenomena. Where Roy Weintraub articulated a neoWalrasian research program in his General Equilibrium Analysis, here I sketch a complementary neo-Mengerian program. In presenting this sketch, I also explain that needless analytical confusion and antagonism can result from a failure to recognize that economic analysis requires two distinct research programs. As a historical side-bar, Carl Menger probably recognized this situation, as evidenced by his correspondence with Léon Walras.

show abstract

Microfoundations and Macroeconomics

Cited by 163 publications

References 56 publications

Accounting for the business cycle: Nominal rigidities, factor heterogeneity, and Austrian capital theory

Accounting for the business cycle: Nominal rigidities, factor heterogeneity, and Austrian capital theory

Ecumenical foundations? On the coexistence of Austrian and neoclassical views on utility

Change within Permanence: Time and the Bivalent Logic of Economic Analysis

Contact Info

Product

Resources

About