The Review of Austrian Economics

, Volume 23, Issue 1, pp 35-53

First online:

Nobelity and novelty: Finn Kydland and Edward Prescott’s contributions viewed from Vienna

  • J. Robert SubrickAffiliated withDepartment of Economics, James Madison University Email author 
  • , Andrew T. YoungAffiliated withDepartment of Economics, University of Mississippi

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The awarding of the Nobel Prize in Economics in 2004 to Finn Kydland and Edward Prescott represents an opportunity to evaluate their contributions in light of Austrian economics. We lay out the basics of their contributions—the general equilibrium approach to economic fluctuations and the game theoretic approach to policy—and argue that they have tenets similar to those of Austrianism. We argue that their methodology parallels Austrian methodology in several significant ways that have gone unnoticed. We conclude that Kydland and Prescott’s Nobel Prize suggests Austrian approaches can have a more prominent impact than they have had in the past.


Austrian methodology New classical methodology Macroeconomics Real business cycles Calibration Time inconsistency


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