The Collected Works of F.A. Hayek,Vol. 12: The Pure Theory of Capital

This paper discusses the Brazilian financial system and the impact of liquidity preference on regional development in Brazil. In the Post-Keynesian literature, endogenous money is introduced into economic activity through the credit provided by banks. The degree to which banks exhibit lower or higher liquidity preference is crucial to this process. Here we estimate the effect of liquidity preference and other financial variables on the number of Brazilian states' patents, in order to gauge the importance of the bank system to technological progress and regional development.     

F. A. Hayek: The Liberal as Communitarian

At the heart of Friedrich A. Hayek's social philosophy is a regard for the socially-constituted nature of man: the individual is not taken to be asocial or pre-social, but rather it is recognized that society defines the individual. The neglect of this aspect of Hayek's work by both liberal and communitarian, as well as libertarian, writers within political philosophy has led to his position being misrepresented, for Hayek's brand of liberalism is more akin to one variant of modern communitarianism than it is to the libertarian strain of liberal thought.     

Embedded markets: A dialogue between F.A. Hayek and Karl Polanyi

The recent economic crisis has once more underscored the close connection between markets and social life, thrusting this point at the centre of the analysis of economic and political activity and has once more asked the question of whether and how individuals are embedded in both. Here I argue that an analysis and partial reconciliation of the positions of F.A. Hayek and Karl Polanyi on the topic can help in this debate.     

Political Business Cycles,Elections and Entrepreneurial Finance: A Framework

Political processes affect the real economy. An important channel through which politics affects economics is uncertainty. It has been observed that political uncertainty is high around national elections and negatively affects corporate investments and foreign capital inflows. If national elections affect corporations and foreign investors, we should expect them to also affect entrepreneurial finance provided by investors like venture capitalists (VCs). To add to that, in a complex federal democracy, state level politics is a significant source of political uncertainty. This is the first paper to examine the impact of national and state elections on entrepreneurial finance and provides a framework of VC investment behavior in the face of political uncertainty. We find that VC investments decrease significantly due to political uncertainty around national and state elections. VCs respond strongly to national elections by decreasing the total investment value and the number of deals in election years. However, they give a softer response to regional political uncertainty around state elections by decreasing only the average deal size. The findings have important implications for governments, regulators and policymakers, and open up an opportunity to examine a variety of new questions which can provide a more detailed and nuanced understanding of the impact of elections on VC investments.

     

The Determinants of UK Business Cycles

This paper considers the causes of post-war UK business cycles. Using an extended stochastic growth model we construct estimates of productivity and preference shocks both of which are highly persistent, volatile and potentially capable of explaining UK business cycles. We find the productivity term is the dominant explanation of UK output fluctuations but our estimated preference shift is crucial in understanding employment movements. A variety of Granger causality tests establish whether these productivity and preference terms are unpredictable and so can be potentially considered as the cause of UK business cycles or whether they are themselves Granger caused by other variables.     

金融要素对经济周期波动的影响:一个文献综述

实证和理论研究均表明,金融要素会放大随机冲击对经济的影响,即金融对经济波动的加速器作用。在此背景下,本文首先梳理金融加速器理论产生的原因及其传导机制;其次,引入金融机构(银行),从企业资产负债表效应和银行资产负债表效应两个角度阐述金融要素对经济波动的放大作用;再次,从多元投资组合和国际借贷两个方面揭示金融加速器对国际经济周期的传播和扩大作用,并指出金融加速器在我国的存在性;最后,总结了金融要素对经济周期波动的影响,并提出未来可能的研究方向。     

Business Cycles: Theory, Evidence and Policy Implications

This paper looks at recent advances in the study of aggregate fluctuations. The emphasis is on three prominent areas of research: the stochastic growth model, economies which exhibit macroeconomic complementarities and models that emphasize heterogeneity. Each section of the paper outlines the theory, examines relevant empirical evidence and then discusses some policy implications of the analysis.     

Debating liberalism: Walter Eucken,F. A. Hayek and the early history of the Mont Pèlerin Society

The Review of Austrian Economics - Walter Eucken is mostly known for his impact on establishing the Social Market Economy in post-war Germany. In this paper we identify how Eucken was highly...     

F. A. Hayek vs. J. M. Keynes in Shackle's marginal gloss*

The intellectual rivalry of F. A. Hayek and J. M. Keynes has recently caught the attention of historians of economic thought, journalists and the broad public. However, how was it viewed at the time? This article uses archival material in the form of marginal annotations made by G. L. S. Shackle to determine contemporary reading responses to the theoretical developments of the 1930s. Shackle's unique reading style that includes legible, dated, annotations and the fact that a substantial part of his academic library survives gives us a unique vantage point from which to explore anew this period of intellectual history.     

Is H.A. Simon a theoretician of decentralized planning? A comparison with F.A. Hayek on planning,market, and organizations

Herbert A. Simon acknowledged Friedrich A. Hayek as a founder of the notion of bounded rationality; yet Simon considered Hayek’s perspective incomplete, and, more in general, their views on market mechanisms, planning, and organization exhibit considerable differences. The comparison between these authors sheds light on Simon’s interpretation of planning, which emerges within his theory of organization (and not in traditional debates on socialism). Contrary to Hayek, he maintained that planning, in specific circumstances, is more advantageous than the market; and in both administration and organization, it involves a decentralized structure based on near independent sub-units. Decentralization of decisions also appears in social planning, which evolves through continuous interactions among planners (i.e., agents and institutions), and it is a process connoted by the absence of “fixed goals”. Finally, Simon defined modern economies more in terms of “organizational economies” than in those of “market economies” and this highlights a further difference with respect to the Austrian economist. This leads to analysis of the nature of organizations as hierarchical and “near-decomposable” structures, which refers to Simon’s theory of complexity and gives an epistemological explanation to the relation between centralization and decentralization.     

I did not call him “Fritz”: Personal recollections of Professor F. A. v. Hayek

Nobel Laureate in Economic Sciences, 1986.     

Praxeology,Experimental Economics and the Process of Choice: F.A. Hayek and Vernon Smith on the Misesian Action Axiom

Mises’s action axiom postulates that human action is purposeful behavior. While this axiom is the building block for a powerful methodology, it is also incomplete, because it sets aside the underlying processes of decision-making. And while Mises does not dismiss the gap between intention and action, he is silent on it, relegating such a study to psychology. We contend that a study of underlying thought patterns and the process of choice – rather than contradicting praxeology and the action axiom – in fact complements the writings of Mises. To demonstrate this, we look at two authors: F.A. Hayek and Vernon Smith. Hayek’s theory of the sensory order sheds light on the process of choice, and explains how decision-making is contextually embedded. Smith’s concepts of ecological rationality and neurological “hard-wiring” help us understand decision-making. We argue that cognitive foundations enrich our understanding of the process of choice, and thus of the Misesian action axiom.