Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

502 Money, Bank Credit, and Economic CyclesAnother empirical study pertinent to the Austrian theoryof the cycle is one conducted by Valerie Ramey, of the Universityof California at San Diego. 115 Ramey has developed anintertemporal model which breaks down into different stagesthe inventories which correspond to: consumer goods, wholesalegoods, manufactured equipment goods, and intermediatemanufactured products. Ramey draws the conclusion that theprice of inventories oscillates more the further they are fromthe final stage of consumption. The inventories closest to consumptionare the most stable and vary the least throughoutthe cycle.Mark Skousen arrives at a similar conclusion in his analysisof trends in the prices of products from three different productionstages: that of finished consumer goods, that of intermediateproducts, and that of material factors of production.Skousen indicates, as stated in footnote 21, that during theperiod from 1976 to 1992, the prices of products from thestages furthest from consumption varied from +30 percent to–10 percent, the prices of intermediate goods only oscillatedbetween +14 percent and –1 percent, and the prices of finalconsumer goods varied from +10 to –2 percent. 116 MoreoverMark Skousen himself estimates that in the crisis of the earlynineties, the gross national output of the United States, ameasure which includes all goods from intermediate stages,fell by between 10 and 15 percent, and not by the significantlylower percentage (between 1 and 2 percent) reflected by traditionalnational accounting figures, like gross national product,which exclude all intermediate products, and therefore enormouslyexaggerate the relative importance of final consumptionwith respect to the total national productive effort. 117115 Valerie A. Ramey, “Inventories as Factors of Production and EconomicFluctuations,” American Economic Review (July 1989): 338–54.116 Mark Skousen, “I Like Hayek: How I Use His Model as a ForecastingTool,” presented at the general meeting of the Mont Pèlerin Societywhich took place September 25–30, 1994 in Cannes, France, pp. 10–11.117 Other empirical studies have also revealed the non-neutral nature ofmonetary growth and the fact that it exerts a relatively greater impacton the industries in which the most durable goods are produced. See,