Peter Lewin and Nicolas Cachanosky
A comprehensive understanding business cycles needs to account not only for the allocation of resources over time but also for resource allocation across industries at any point…
Abstract
Purpose
A comprehensive understanding business cycles needs to account not only for the allocation of resources over time but also for resource allocation across industries at any point in time. But to properly understand how these “time-distortions” take place and how the price mechanisms that drive them work, a clear and well-defined conceptualization of the “average length” of the structure of production is required. The authors use insights provided by Macaulay’s duration and Hicks’s average period to show that financial duration and related concepts have a direct connection to macroeconomic stability.
Design/methodology/approach
This study uses a theoretical and conceptual approach. It first presents the connection between average period of production and financial duration and then compares and applies this to macroeconomic business cycle theories.
Findings
This study points to important implications for macroeconomic policy. It not only claims that a low interest rate contributes to the creation of asset bubbles but also shows the market mechanism through which the real sector is affected. The application of financial concepts to macroeconomic cycles shows the price mechanism through which resources are allocated across industries.
Originality/value
The financial approach we offer to business cycles is fairly unexplored. As such, this paper offers a novel conceptual and theoretical framework for business cycles.
Details
Keywords
Martin Fransman, Giampaolo Garzarelli, Peter Lewin, Jochen Runde and Christopher Torr
The Symposium on “The Legacy of Ludwig Lachmann: Interdisciplinary Perspectives on Institutions, Agency and Uncertainty” stood out also because of a plenary session organized as a…
Abstract
The Symposium on “The Legacy of Ludwig Lachmann: Interdisciplinary Perspectives on Institutions, Agency and Uncertainty” stood out also because of a plenary session organized as a roundtable discussion on “Reminiscences of Lachmann” with the participation of Martin Fransman, Peter Lewin, Jochen Runde and Christopher Torr, and Giampaolo Garzarelli as moderator. The text that follows reports the interesting views about Lachmann’s public as well as private persona that emerged from the roundtable.
Details
Keywords
Presents anecdotes in the development of aspects of the field of management, relating to Lawrence J. Henderson, Chester I. Barnard, Peter Drucker, Kurt Lewin and J.B. Rhine. These…
Abstract
Presents anecdotes in the development of aspects of the field of management, relating to Lawrence J. Henderson, Chester I. Barnard, Peter Drucker, Kurt Lewin and J.B. Rhine. These suggest that history needs to be viewed in a hermeneutical philosophy where it is seen as presenting the Zeitgeist of its period rather than describing facts or causal relations.
Details
Keywords
Ludwig Lachmann looked to the Austrian School of economics as an intellectual space of refuge from the sterile formalism that constituted the academic work of the mainstream…
Abstract
Ludwig Lachmann looked to the Austrian School of economics as an intellectual space of refuge from the sterile formalism that constituted the academic work of the mainstream economics establishment. From an early interest in capital theory, he moved to broader epistemological, methodological, and institutional concerns – specifically from the subjectivism of values to the subjectivism of expectations and the implications thereof for human action. Human action in disequilibrium was his central focus. This chapter examines the relationship of Lachmann’s views to the Austrians, those who preceded him, those of his time, and those who have come after him. During his lifetime, his views sometimes provoked controversy. I examine this from the perspective of 2017 and the concerns of the modern Austrian intellectual community and find that Lachmann’s views are surprisingly much more complementary to those of his contemporary Austrians than have perhaps hitherto been realized.
Details
Keywords
Claudio Vignali and Mike Zundel
There has been extensive debate about the purpose and scope of appropriate management research. Many authors agree that management research does not operate a single agreed…
Abstract
There has been extensive debate about the purpose and scope of appropriate management research. Many authors agree that management research does not operate a single agreed scientific paradigm and can be seen as a soft, applied area of study, showing features of both “engineering” and “craft” orientations. Nevertheless, the need for management theory to be made more relevant to the work of practice by explaining that it will be necessary to identify new ways of formulating and employing scientific knowledge to practical ends is the basis of this work. This article develops the methodology used in operationalising heuristic devices. Practitioners extend their use of the marketing mix in developing their strategic process. In this process they always face problems and the answers always cause concern. This article develops a model, which defines the use of the heuristic devices and allows action and review. The qualitative approach in action research was analysed in a series of case studies, which formed the basis of the research materials used.
Details
Keywords
Describes the history and activities of the Crime Writers′Association, highlighting various awards, and recent winners. Detailsthe CWA Spare Copy Catalogue Scheme, whereby…
Abstract
Describes the history and activities of the Crime Writers′ Association, highlighting various awards, and recent winners. Details the CWA Spare Copy Catalogue Scheme, whereby authors′ spare copies of their own books are made available for purchase by libraries when those books are out of print.
Details
Keywords
Nicolás Cachanosky and Peter Lewin
In this paper, we study financial foundations of Austrian business cycle theory (ABCT). By doing this, we (1) clarify ambiguous and controversial concepts like roundaboutness and…
Abstract
In this paper, we study financial foundations of Austrian business cycle theory (ABCT). By doing this, we (1) clarify ambiguous and controversial concepts like roundaboutness and average period of production, (2) we show that the ABCT has strong financial foundations (consistent with its microeconomic foundations), and (3) we offer examples of how to use the flexibility of this approach to apply ABCT to different contexts and scenarios.
Details
Keywords
A keynote address in which the author looks back at the rebirth of Austrian economics, characterizes its current state, and looks forward to its future development. The early…
Abstract
A keynote address in which the author looks back at the rebirth of Austrian economics, characterizes its current state, and looks forward to its future development. The early years after the rebirth focused on methodology, but as the modern school has development its concerns have become much more varied and connected to specific current issues. The prospects for further development are good as more young scholars arrive.
Details
Keywords
When understood as an inevitable inconsistency of individual plans, disequilibrium is not only a necessary condition for the existence, and hence understanding, of the market…
Abstract
When understood as an inevitable inconsistency of individual plans, disequilibrium is not only a necessary condition for the existence, and hence understanding, of the market process as we know it, it is also the glue connecting three other “Austrian” themes. In equilibrium heterogeneity of resources would have no strategic significance, specific and private knowledge would be much less problematic, and no profits net of contractual rent payments would be earned. In the real world of disequilibrium firm differences are not a mystery, rent is not an indication of inefficiency or monopoly power, and there is room to analyze, admire, reward, and consult about successful business strategy. Rent appropriation comes from ownership of valuable resources. And a successful strategy, one that earns enhanced rents, is one that acquires ownership of valuable and value-creating resources. Such a strategy is dependent for its success on superior vision (or luck), something which cannot exist in equilibrium.
We repeat the mistakes of history because of the neglect of history, the imperfections of memory, and the complexity of social situations. I begin with a discussion of the first…
Abstract
We repeat the mistakes of history because of the neglect of history, the imperfections of memory, and the complexity of social situations. I begin with a discussion of the first two and then turn to the third. After discussing the meaning and significance of complexity, I discuss the causal ambiguity surrounding economic policies and what this implies for the burden of proof in policy espousal and design. I consider the role of social institutions, their function and origins, and how they are able to facilitate human action in an economic environment of accelerating change. Institutions like markets, monetary systems, systems of common law, languages are all networks. So are groups of believers in the efficacy of certain kinds of economic policy. I consider the role of networks in general and in regard to economic cycles in particular. In the concluding section, I suggest that the implications of complexity for the occurrence of cycles, and the adoption of discretionary policies to deal with them, are likely not only to exacerbate the effects of the cycles, but also, more fundamentally, to subvert the fundamental institutional structure of our economy, what we may think of as our embedded constitutions, to the great long-term detriment of our economic health.