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Austrian persistence? Capital-based business cycle theory and the dynamics of investment spending

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Abstract

Survey data are used to investigate the very long spending lags estimated in neoclassical studies of investment expenditures. Neoclassical investment theory has trouble explaining the length of these lags. By recognizing the Austrian concept of the capital structure and applying it to the problem, the present paper explains the length of these lags as proceeding from interactions between types of capital. Austrian arguments stemming from Austrian business-cycle theory seem to be needed to explain these lags.

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Authors and Affiliations

  1. Department of Economics, University of Maine, Stevens Hall, Orono, ME, 04469-5774

    Michael R. Montgomery (Associate Professor)

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  1. Michael R. Montgomery
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Correspondence to Michael R. Montgomery.

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JEL Code E3, E4, C1

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Montgomery, M.R. Austrian persistence? Capital-based business cycle theory and the dynamics of investment spending. Rev Austrian Econ 19, 17–45 (2006). https://doi.org/10.1007/s11138-006-6092-x

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  • DOI: https://doi.org/10.1007/s11138-006-6092-x

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