Tag: libertarianism

Business Cycles Explained: Real Business Cycle Theory

Business Cycles Explained: Real Business Cycle Theory

Economists call it real business cycle theory, but maybe that’s a funny name for lay people. What it really means is that business cycles are often caused by negative shocks to technology. Let’s make that more concrete. Let’s…

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Business Cycles Explained: Keynesian Theory

Business Cycles Explained: Keynesian Theory

Simple way to think about the Keynesian model. Keynesian, New Keynesian. But let’s boil it down to essentials. Economic downturns are very often caused by a shortfall in aggregate demand. Aggregate demand you can think of very crudely…

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Business Cycles Explained: Austrian Theory

Business Cycles Explained: Austrian Theory

The Austrian theory postulates that entrepreneurs are tricked or fooled by government-engineered increases in the money supply. Here’s a simple example of how the scenario runs: The central bank inflates the supply of money. The real interest rate…

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