Comments and observations on social and political trends and events.

Wednesday, January 26, 2011

My Reply to Krugman on Austrian Business-Cycle Theory - Robert P. Murphy - Mises Daily

This essay from the Mises Foundation does a nice job explaining the key ideas of Austrian economics while rebutting Paul Krugman.

I do not claim that the Austrian theory of the business cycle captures every pertinent feature of modern recessions. What I doclaim is that a theory — including any of Paul Krugman's Keynesian models — that neglects the distortion of the capital structure during boom periods cannot possibly hope to accurately prescribe policy solutions after a crash.

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