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

Additional Considerations on the Theory of the Business Cycle 503Hopefully the future will bring more frequent and abundanthistorical-empirical research on the Austrian theory ofthe business cycle. With luck this research will rest on datafrom input-output tables and permit the use of the Austriantheory to reform the methodology of the national accounts,thus permitting the gathering of statistical data on variationsin relative prices, variations which constitute the microeconomicessence of the business cycle. Table VI-1 is designed tosimplify and facilitate this type of empirical research in thefuture. It summarizes and compares the different phases inthe market processes triggered by an increase in society’s voluntarysaving and those triggered by an expansion of bankcredit unbacked by a prior rise in voluntary saving.for example, Peter E. Kretzmer, “The Cross-Industry Effects of UnanticipatedMoney in an Equilibrium Business Cycle Model,” Journal of MonetaryEconomics 23, no. 2 (March 1989): 275–396; and Willem Thorbecke,“The Distributional Effects of Disinflationary Monetary Policy,” JeromeLevy Economics Institute Working Paper No. 144 (Fairfax, Va.: GeorgeMason University, 1995). Tyler Cowen, commenting on these and otherstudies, concludes:[T]he literature on sectoral shifts presents some of the mostpromising evidence in favor of Austrian approaches to businesscycles. The empirical case for monetary non-neutralityacross sectors is relatively strong, and we even see evidencethat monetary shocks have greater real effects on industriesthat produce highly durable goods. (Tyler Cowen, Risk andBusiness Cycles: New and Old Austrian Perspectives [London:Routledge, 1997], chap. 5, p. 134)Other recent articles on this matter are James P. Keeler, “Empirical Evidenceof the Austrian Business Cycle Theory,” The Review of AustrianEconomics 14, no. 4 (2001): 331–51; Robert Mulligan, “An EmpiricalExamination of Business Cycle Theory,” The Quarterly Journal of AustrianEconomics 9, no. 2 (2006): 69–93; Paul Cwik, “Austrian Business CycleTheory: A Corporate Finance Point of View,” The Quarterly Journal ofAustrian Economics 11, no. 1 (2008): 60–68; Anthony M. Carilli and GregoryM. Dempster, “Is the Austrian Business Cycle Still Relevant?” TheReview of Austrian Economics 21, no. 4 (December 2008): 271–81; andFrancis Bismans and Christelle Mougeot, “Austrian Business Cycle Theory:Empirical Evidence,” The Review of Austrian Economics 22, no. 3(September 2009): 241–47.