The Phenomenon of Speculative Bubble in the Light of the Austrian Business Cycle Theory


  • Jarosław Cholewiński Nicolaus Copernicus University in Torun



speculative bubble, business cycle, crisis, capital structure of economy, Austrian macroeconomics


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.


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How to Cite

Cholewiński, J. (2010). The Phenomenon of Speculative Bubble in the Light of the Austrian Business Cycle Theory. Equilibrium. Quarterly Journal of Economics and Economic Policy, 4(1), 51–63.



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