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The Mises-Hayek business cycle theory, fiat currencies and open economies

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  • Nicolas Cachanosky

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Abstract

This paper extends the Mises-Hayek business cycle theory to open economies with fiat currencies. I explore: (1) the problem of domestic versus international monetary policy with fiat currencies in an international setting. (2) How the feedback effects between central banks in the context of an expansionary monetary contributes to extend and transmit a Mises-Hayek business cycle from big economies to small financially integrated economies. I find that a lengthening of the period of production is not the only effect produced on the capital structure, but also a misallocation of capital goods between the production of tradable and non-tradable goods and services and that business cycles can become more severe when there are open economies with fiat currencies. Copyright Springer Science+Business Media, LLC 2014

Suggested Citation

  • Nicolas Cachanosky, 2014. "The Mises-Hayek business cycle theory, fiat currencies and open economies," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 27(3), pages 281-299, September.
  • Handle: RePEc:kap:revaec:v:27:y:2014:i:3:p:281-299
    DOI: 10.1007/s11138-012-0188-2
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    Cited by:

    1. Rodríguez González, Guillermo, 2012. "Una revisión de la enfermedad holandesa a la luz de la teoría austriaca del ciclo económico
      [A review of the Dutch disease in the light of the Austrian theory of business cycle]
      ," MPRA Paper 39986, University Library of Munich, Germany.
    2. Adrián O. Ravier & Nicolás Cachanosky, 2015. "Fiscal Policy in Capital-Based Macroeconomics with Idle Resources," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 30(Winter 20), pages 81-95.
    3. Cachanosky, Nicolas, 2014. "The effects of U.S. monetary policy on Colombia and Panama (2002–2007)," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(3), pages 428-436.
    4. repec:kap:revaec:v:30:y:2017:i:2:d:10.1007_s11138-016-0340-5 is not listed on IDEAS
    5. Nicolas Cachanosky, 2015. "Expectation in Austrian business cycle theory: Market share matters," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 28(2), pages 151-165, June.
    6. repec:kap:revaec:v:30:y:2017:i:4:d:10.1007_s11138-016-0344-1 is not listed on IDEAS

    More about this item

    Keywords

    Austrian business cycle theory; Fiat currencies; Exchange rate; International business cycle; B53; E32; E58; F44;

    JEL classification:

    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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