Wednesday, June 12, 2013

The evidence for different business cycle theories

Off the top of my head, I can think of five different "live" theories of the business cycle:

Marxist
Minskian
Neo-Keynesian
Neo-Monetarist
Austrian

Given that we just had a serious downturn, we might ask which of these competing theories is confirmed by recent events?
The correct answer is… all five of them! Don't believe me? Just go read the bloggers in favor of these different theories. They will all tell you that recent events are exactly what should be expected, given that their theory is true.

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