Interest Rates in Austrian Theory

Release Date
July 30, 2012

Topic

The Fed & Monetary Policy
Description

 

Check out Prof. Cowen’s popular econ blog, Marginal Revolution.
What role do interest rates play in the Austrian Business Cycle Theory?
Professor Tyler Cowen explains the Austrian view that interest rates affect the way entrepreneurs invest. When government expansion of the money supply affects interest rates, Austrians argue that these interest rates give entrepreneurs false signals about where and how much to invest. Professor Cowen explores these arguments and some counterarguments from other business cycle theories.