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Introduction

In: Austrian Theory of Capital and Business Cycle

Author

Listed:
  • Pavel Potuzak

    (Prague University of Economics and Business)

Abstract

The core of the Austrian theories of capital and the business cycle is the allocation of factors of production over time, which can be either sustainable or unsustainable. Sustainable allocation is associated with real economic growth that can be driven by lower time preference in the society, or by technological progress. Unsustainable allocation is caused by monetary forces coming either from the central bank and commercial banks on the supply side or from changing liquidity preference on the demand side. The initial dynamics of sustainable and unsustainable paths are very similar. However, money-induced economic booms end in misallocation of resources and painful recessions. This book develops a graphical apparatus that separates these two cases. This approach can complement traditional textual explanations of Austrian theory, as well as the standard Hayek triangles.

Suggested Citation

  • Pavel Potuzak, 2022. "Introduction," Springer Books, in: Austrian Theory of Capital and Business Cycle, chapter 0, pages 1-4, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-18728-5_1
    DOI: 10.1007/978-3-031-18728-5_1
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