The macroeconomic models of the austrian school: A history and comparative analysis

Abstract

This paper offers a synthetic and comparative assessment of the most basic Austrian macroeconomic models, i.e. the models that analyze the static forces determining the equilibrium interest rate and structure of production (monetary disequilibria and business cycles are not part of this investigation). The three models presented here are those of Böhm-Bawerk ([1889] 1959), Hayek (1936, 1941), and Garrison (2001). This review shows that these models are largely inconsistent with each other, but also that at a more general level they share several important charac-teristics. Finally, a tentative explanation is offered as to why there is no cumulative tradition in the Austrian School in this kind of basic macroeconomic theorizing.