Zahringer on Monetary Disequilibrium Theory

The latest issue of the The Quarterly Journal of Austrian Economics includes the article "Monetary Disequilibrium Theory and Business Cycles: An Austrian Critique" by Kenneth A. Zahringer. Zahringer's paper was presented at last year's Austrian Student Scholars Conference here at Grove City.

The abstract of the article reads:

Monetary disequilibrium theory has some common ground with Austrian economics, but there is substantial disagreement regarding the analysis of business cycles. While monetary disequilibrium theory does include some consideration of the market process so important in Austrian theory, at its core lies a view of equilibrium as essentially a static state. This incorrect definition has led to an inadequate explanation of the business cycle in the monetary disequilibrium tradition. The Austrian theory of the business cycle examines business cycles from within the context of the entire economic process and thus, far from being overly specific, is the only theory that provides a complete explanation of that phenomenon.

The article is particularly relevant for today because much of the current enthusiasm for the Federal Reserve to adopt nominal GDP targeting is fueled by monetary disequilibrium theory.