The Review of Austrian Economics

, Volume 23, Issue 1, pp 35–53 | Cite as

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

Article

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 methodology New classical methodology Macroeconomics Real business cycles Calibration Time inconsistency 

JEL

B10 B25 B23 B41 E10 C10 

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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

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