An Austrian view of expectations and business cycles

Austrian economists have contributed several important concepts to business cycle theory including: inter-temporal coordination of production and consumption, heterogeneous specificity of capital, non-neutrality of money, and the capital structure of production. Noticeably lacking, however, is a clear theory of expectations. Recent Austrian responses to rational expectations critiques—such as positing a prisoner’s dilemma, heterogeneous entrepreneurs, and adverse selection—try to fill this gap. But much work remains to be done developing an Austrian theory of expectations, one where they are endogenous to the market process and market institutions. This paper explores how people adapt their expectations to changing market phenomena based upon their perceived costs and benefits of doing so. It then applies endogenous expectations to the 2008 financial crisis.     

The Austrian Tertius Gaudens: A Revisit of Competition Theory in Light of Georg Simmel

Austrian market process theory stands out in assigning particular importance to the role of the customer. This is however not really salient as competition is discussed save for in a few particular instances. This is a pity since the market process discourse thereby deprives itself of a firm progressive footing concerning further elaborations of how market dynamics evolve. By drawing on the reasoning that originates some hundred years ago with the works of Georg Simmel, this paper brings forward an Austrian version of his idea on Tertius Gaudens. In a market context this is the alert buyer who benefits from the disunion that prevails between sellers to the extent that market intimacy, conceived of as supplier specificity, is low. In this manner some of the inner workings of the market process, what promotes competition subject to which institutional constraints, are discussed to the benefit of yet another important Austrian demarcation, that of competition as being geared by the customer.     

The Infusion of Relational Market Obligations into the Austrian Agenda—Some Lessons Learned from Economic Sociology

Given its dictum of market equilibrium, economics in general obviously does poorly in shouldering market dynamics. Pervading obligatory traits of the market (other than mere dyadic contracting) is yet another area where not much attention is devoted. Whereas the Austrian agenda fills the first of these voids in a most sophisticated manner, its current discourse appears as oblivious concerning the manner in which market exchange transforms into relational interconnected obligations. That is to say, exchange is hardly understood as an indispensable facet of durable market obligations such as relationships 'constituting the market', but exclusively as immediate entrepreneurial arbitrage. Apart from an outright peculiar failure to recognize some of its own roots in this regard this omission unnecessarily delimits the manner in which Austrians can proceed and deepen their market analysis. The principal idea of this paper is to scrutinize the manner in which relational market obligations can be introduced into Austrian reasoning by drawing on ideas from within economic sociology. Max Weber's dictum on market openness takes on a particular role in this regard. An adjacent contribution strived for is to let this scrutiny foreshadow the manner in which such a partial reconciliation of market ideas from within economic sociology and Austrian economics could proceed.     

环境退化、市场非均衡与创业

文章提出了一种新的创业观,解释了环境问题创业。奥地利学派的创业理论认为,市场非均衡提供了创业机会。环境退化作为一种市场非均衡,为创业者提供了潜在机会。但是对这种机会的利用存在一系列障碍,文章将针对其中的不对称信息、不完全信息与公共产品,介绍创业者如何克服这两种障碍,利用环境退化所产生的机会进行创业,缓解环境退化。     

市场结构及市场效率的实验经济学综述

实验经济学对于市场效率和市场结构的研究最早在1948年由Chamberline开创。经济学家经过大量实验发现,不但市场前提假设关系到市场均衡结果及效率,交易制度也会对均衡产生重大影响。并且,不符合完全竞争市场假设的市场结构也有可能实现资源有效配置。本文对实验经济学关于市场结构及市场效率的相关研究进行了回顾与综述,并重点阐述其对完全竞争市场的研究,以揭示交易制度及市场前提对市场效率的综合影响。本文得到的结论显示：即使没有达到完全竞争市场的严格假设,也可能达到完全竞争市场的均衡状态,因而达到最优的配置效率。并且,对于市场结构——完全竞争、垄断和寡头垄断市场的实验研究也表明,并不是如传统古典经济学模型所言：只有完全竞争的市场结构才能够达到资源的有效配置,垄断市场效率也并不是完全与模型所言一致。而且不同于古典经济学,实验经济学将交易制度看作外生变量,认为其对最终市场效率也会产生很大影响。     

Market institutions and economic evolution

Our cognitive limitations cause us to rely on institutions to guide reasonable behaviour; market institutions reduce the costs of search, negotiation, and monitoring entailed in making single transactions. The making of markets requires an investment of immaterial capital, the major share of which typically is provided by those who expect to be very active on one side of the market. This `external organisation' provides producers with information for the development of new products; by simplifying transactions it also allows consumers greater scope for developing consumption capabilities. Thus the evolution of institutions guides the evolution of goods and services.     

The educational and labor market returns to preschool attendance in Austria

Preschool attendance is widely recognized as a key ingredient for later socioeconomic success, mothers’ labor market participation, and leveling the playing field for children from disadvantaged backgrounds. However, the empirical evidence for these claims is still relatively scarce, particularly in Europe. Using data from the 2011 Austrian European Union Statistics of Income and Living Conditions (EU-SILC), we contribute to this literature by studying the effects of having attended preschool for the adult Austrian population. We find strong and positive effects of preschool attendance on later educational attainment, the probability of working full time, hourly wages, and the probability that the mother is in the labor market. Full time workers at the bottom and the top of the distribution benefit less than those in the middle. Women in particular benefit more in terms of years of schooling and the probability of working full time. Other disadvantaged groups (second generation migrants; people with less educated parents) also often benefit more in terms of education and work.     

Market Theoretical Frameworks—Which One?*

The problem of choice between theoretical frameworks forms the focal point of this paper. Its intention is to discuss a possible choice between two distinct approaches to the market order—the ‘neoclassical’ and the ‘Austrian’. Firstly, the basis upon which the two theoretical frameworks are distinguished is explained. Secondly, an attempt is made to show that the two are indeed different and to derive the implications of their differences for policy, for the practice of economics as a social science and for human well-being. Finally, a defensible criterion is suggested along with the ensuing choice, and an explanation is offered as to the relevance of such a choice.     

The Political Entrepreneur and the Coordination of the Political Process: A Market Process Perspective of the Political Market

The aim of this article is to apply the Austrian analysis of the entrepreneur to the political process. By distinguishing the political process from the economic process, we will endeavour to show to what extent an analysis in terms of the political market process is both possible and relevant. The existence of an information conveyance which can be assimilated to a price system within the political process, with its resulting profits, are motivating elements for the political entrepreneur. The political entrepreneur is doubly specialised and possesses all the Kirznerian functions of the Austrian entrepreneur as a coordinating agent for the political process.     

An Entrepreneurial Perspective of Institutional Change

Utilizing Kirzner's theory of entrepreneurial discovery, Schumpeter's two types of economic responses and the Austrian theory of institutions as building blocks, this paper constructs an entrepreneurial theory of institutional change. Focusing on the coordinating role of human institutions, this paper argues that entrepreneurial extraordinary discovery destroys the stability of institutions and creates uncertainty in the market (creative response). As a result, institutions are incapable of coordinating economic activities because market participants' stocks of knowledge are no longer adequate to solve new problems. Hence, profit gaps or mismatches of market participants' plans occur. Given new technologies, new relative prices and tastes, imitative entrepreneurs soon identify and capitalize on the opportunities created by Schumpeterian extraordinary discoveries (adaptive response). Imitators improve production methods, modify rules and alter property rights in order to improve coordination. Through learning, experimentation, trial and error, the more rewarding methods are then selected. Successful actions are imitated and repeated in the market, and gradually crystallized into new institutions which once again serve as social coordinators.     

高校跳蚤市场的发展现状研究与实践

随着中国经济的不断发展,跳蚤市场作为一种新的经济现象在中国高校内出现并逐渐发展起来。它具有其他市场所没有的特点,如市场主体稳定性、商品廉价性、商品比例变动性以及"地摊式"经营主导性。然而,跳蚤市场依然存在商品质量难以保证、市场秩序不规范、销售方式单一性等问题。因此,要从规范经营者自身行为、建立规范统一的市场秩序、搭建网络交易平台、构建"双轨制"售后服务体系等方面促进高校跳蚤市场健康、有序地发展。     

Supply Disruptions and Regional Price Effects in a Spatial Oligopoly—An Application to the Global Gas Market

Supply shocks in the global gas market may affect countries differently, as the market is regionally interlinked but not perfectly integrated. Additionally, high supply‐side concentration may expose countries to market power in different ways. To evaluate the strategic position of importing countries with regard to gas supplies, we disentangle the import price into different components and characterize each component as price increasing or price decreasing. Because of the complexity of the interrelations in the global gas market, we use an equilibrium model programmed as a mixed complementarity problem (MCP) and simulate the blockage of liquefied natural gas (LNG) flows through the Strait of Hormuz. This enables us to account for the oligopolistic nature and the asymmetry of the gas supply. We find that Japan faces the most severe price increases, as the Japanese gas demand completely relies on LNG supply. In contrast, European countries such as the UK benefit from good interconnection to the continental pipeline system and domestic price taking production, both of which help to mitigate an increase in physical costs of supply as well as in the exercise of market power.     

A model of benefit and tax share discrimination by a monopoly bureau

This paper integrates the theory of demand for publicly provided goods in a democracy with the theory of bureaucratic supply in order to develop a model of benefit share and tax share discrimination by a monopoly bureau. The demand side of the political market is based on a utility maximizing model of voter behavior with voters' demands aggregated through a majority voting process. The supply side of the political market is based on a budget maximizing model of bureaucratic behavior. The bureau is assumed to possess monopoly power as a result of either its control over benefit shares or tax shares and, hence, implicit tax prices or its control over budget proposals placed on the agenda. Different degrees of discrimination are examined and in each case the equilibrium of the model yields a total budget for the bureau as well as distributions of benefit shares or tax shares across voters.     

就业体制改革不应忽视内部劳动力市场

本文吸收了西方劳动经济学和企业理论的新成果，论述了内部劳动力市场的基本原理，重新审视了我国以往的就业体制改革思路及其成本与收益．提出发展内部劳动力市场是当前深化我国就业体制改革亟待解决的一个重要问题，并阐述了若干具体的操作思路。     

Θ The cultural transmission of trust norms: Evidence from a lab in the field on a natural experiment

We conduct trust games in three villages in a northeastern Romanian commune. From 1775–1919, these villages were arbitrarily assigned to opposite sides of the Austrian and Ottoman/Russian border despite being located seven kilometers apart. This plausibly exogenous border assignment affected local institutions and late-18th century migration in a manner that likely also affected trust. Conditional on trust norms being affected by these centuries-old historical circumstances, our experimental design tests the degree to which such norms are transmitted intergenerationally. Consistent with theoretical predictions, we find that participants on the Austrian side that also have family roots in the village are indeed more likely to trust outsiders.     

The problem of order in Austrian economics: Kirzner vs. Lachmann ∗

The current controversy among Austrian economists concerns the precise way in which time and ignorance is to be incorporated into market analysis. While both sides think the market process is fundamentally orderly and coherent, they disagree about how to conceptualize that order. One side, associated mostly with Israel Kirzner, conceives of economic order in the conventional sense of a system converging towards a neoclassical notion of equilibrium. The Austrian contribution to this analysis is to emphasize the important role of entrepreneurial alertness in bringing about convergence towards equilibrium. Kirzner's theory of alertness is able to incorporate partial ignorance into economic analysis, but it does not give a satisfactory account of the consequences of real time.

The other side, following Ludwig Lachmann, argues that a full appreciation of the implications of time and ignorance in economics forces us to abandon conventional notions of equilibrium and instead formulate a theory of the ‘kaleidic society’. Lachmann makes a convincing case for the inappropriateness of conventional notions of equilibrium, but fails to weave his critiques into a theory of social order.     

Market process(es) and (un)knowledge

By extending an underdeveloped idea of Lachmann, I show that the Austrian theory of the market process à la Kirzner is unable to explain the diversity of market processes because it neglects the imperfect inter-market mobility of factors of production. I show that by taking into account the imperfect mobility of capital equipment and the associated reshuffling costs, it is possible to formulate a set of empirically testable implications about the unfolding of the market process. Furthermore, I show that reshuffling costs shape the context in which the learning process takes place and that the epistemic assumption of structural opacity on which the Austrian theory of the market process relies is not incompatible with the epistemics assumption of structural transparency of neoclassical economics. These epistemic assumptions can be seen as the two poles of a “knowledge spectrum”, from potential omniscience to sheer ignorance.     

旅游市场监督博弈分析

虽然我国旅游业发展迅速 ,国际、国内旅游收入总量大 ,但是旅游企业的效益和整体市场效率却较低 ,旅游供需处在一种低水平的均衡点上。本文以旅行社产品为例 ,从旅游市场低效率的原因入手 ,通过对旅游市场监督博弈及其均衡结果的分析 ,指出只有政府加强市场监督管理 ,让失职监督者得到应有的惩罚才是提高旅游市场效率的最佳策略     

Doing Away with the Sovereign: Neoliberalism and the Promotion of Market Discipline in European Economic Governance

ABSTRACT

This article proposes a critical reading of market discipline and its limitations as a mechanism in European economic governance. Consistent with neoliberal beliefs about market-based governance, the Economic and Monetary Union (EMU) is premised on the functioning of the government bond market as a fiscal-policy discipliner. However, the operation of market discipline requires that neither governments nor their private creditors can rely on an authority to bail them out. It, therefore, precludes the kinds of intervention by Eurozone’s supranational institutions witnessed during the euro crisis. In the post-crisis context, efforts to strengthen market discipline continue to be frustrated by the growing reliance of financial institutions on government bond markets as well as the European Central Bank’s (ECB) active participation in those markets. Having undermined the credibility of the market as an autonomous and apolitical mechanism of discipline, European economic governance struggles to come to terms with the rise of a supranational ‘economic sovereign’ in the Eurozone.     

Stock,Energy and Currency Effects on the Asymmetric Wheat Market

The purpose of this paper is to explore the effects of financial and currency indicators on wheat futures prices. The results suggest that the stock market, and particularly the S&P 500, positively influence the wheat market, a fact that is attributed to the wealth effect and the modern portfolio management in the context of international markets’ integration. There is also evidence that the energy markets affecting the supply and demand side exert significant impact on the wheat market. Furthermore, the results show that the shocks of the U.S. dollar/yen exchange rate are transmitted to the wheat market. Finally, the structural analysis of wheat prices’ volatility support the hypothesis of the asymmetric conditional variance, as it appears to be more volatile in response to positive shocks caused by higher wheat prices, contrary to the respective results of the equities market.