W ell into the 1930s, Austrian contributions to business cycles and economic coordination stood at the forefront of economic theorizing. What is now labeled the Austrian theory of the business cycle was articulated originally by Mises (1912), with significant subsequent elaboration by Hayek (1935).1 While the Austrian-type formulations represented a robust research program during that period, those formulations pretty much disappeared from economics in the 1940s, remaining alive only on a periphery here and there.2 The Keynesian hegemony, however, began to disintegrate in the late 1960s. Macro texts now commonly portray a menu of conceptual options that include Classical, Keynesian, monetarist, new Classical, and new Keynesian varieties of macro theorizing. Despite various restatements of the Mises-Hayek insights in recent years, the Austrian insights have experienced no renaissance within the universe of macro theorizing. A curmudgeonly response to this observation would be that this is because those insight...

Austrian Cycle Theory: Saving the Wheat while Discarding the Chaff