The Review of Austrian Economics

, Volume 23, Issue 1, pp 35–53

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

Article

DOI: 10.1007/s11138-009-0079-3

Cite this article as:
Subrick, J.R. & Young, A.T. Rev Austrian Econ (2010) 23: 35. doi:10.1007/s11138-009-0079-3

Abstract

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.

Keywords

Austrian methodologyNew classical methodologyMacroeconomicsReal business cyclesCalibrationTime inconsistency

JEL

B10B25B23B41E10C10

Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Department of EconomicsJames Madison UniversityHarrisonburgUSA
  2. 2.Department of EconomicsUniversity of MississippiOxfordUSA