The Phenomenon of Speculative Bubble in the Light of the Austrian Business Cycle Theory
DOI:
https://doi.org/10.12775/EQUIL.2010.004Keywords:
speculative bubble, business cycle, crisis, capital structure of economy, Austrian macroeconomicsAbstract
The article presents the modern interpretation of the Austrian business cycle theory and the look at the phenomenon of economic bubble through the lens of that theory. The aim of the article is to answer the question ?What is the main cause of economic bubbles?. The author suggests that it is a depiction which integrates cyclical fluctuations induced by credit expansion with the phenomenon of speculative bubble. Capital-based macroeconomics proposed by Garrison can become a core of universal economic theorizing. The model presented by the author shows how credit expansion that decreases interest rate of credits below its natural level causes medium-run discoordination of production structure. Disruptions that lies in the strong fluctuations of capital goods during a cyclical episode can be understand as consecutive stages of speculative bubble. In the paper the author conducted a historical analysis of data to investigate whether the dramatic increase in house prices that occurred in the United States after the year 2000 could have been triggered by credit expansion. The author summarizes that such hypothesis can?t be rejected.
Downloads
References
French D.E. (1992), Early Speculative Bubbles and Increases in the Supply of Money Department of Business and Economics University of Nevada, Las Vegas
Szumny B. (2009), Bąble spekulacyjne jako anomalia współczesnych rynków finansowych, ?Equilibrium?, nr 2
Garrison R.W. (2006), Time and Money, Routledge, New York
Garrison R.W. (2008), Mainstream Macro in an Austrian Nutshell,
http://www.auburn.edu/~garriro/mainstreammacro.pdf (stan na dzień 1 października 2009)
Böhm-Bawerk E. (1930), The Positive Theory of Capital, New York
Hayek F.A. (1931), Prices and Production, New York
Rothbard M. (2000), America?s Great Deppresion, Auburn
Murphy R. P. (2008), The Importance of Capital Theory,
http://mises.org/story/3155 (stan na dzień 1 października 2009)
Hartcher P. (2006), Bubble Man, New York
Schwartz A.J. (2008), Origing of the financisl market crisis of 2008,?Cato Journal?, Vol. 29, No. 1 (Winter 2009).
