Thursday, October 11, 2012

Cochran on the Latest Evidence Supporting an Misesian Interpretation of Our Recent Economic Past

One of the criticisms of Austrian business cycle theory that many continue to make is that the it is merely an "armchair theory" with little or no empirical data to back it up. One can immediately rebut such charges because the Austrian literature does contain several contributions that puts empirical meat on the theoretical bones. Murray Rothbard's America's Great Depression and The Panic of 1819 quickly come to mind, as does the historical discussion in Chapter 6 of Jesus Huerta de Soto's Money, Bank, Credit and Economic Cycles.

Writing at the Circle Bastiat, John P. Cochran provides some excellent analysis of median household data that provides empirical support for an Austrian interpretation of 1995-2012. As Cochran notes,

While one should always be careful using median income figures, the data is consistent with and can be best understood when combined with a capital-structure macro model of the economy.

He cites several recent articles by Roger Garrision, Frank Shostak, Adrian Ravier, and Joseph T. Salerno that bear this out. Cochran packs a lot into a relatively brief post that is well worth reading.

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