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Cambridge Journal of Economics Advance Access originally published online on February 7, 2005
Cambridge Journal of Economics 2005 29(5):685-707; doi:10.1093/cje/bei021
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© The Author 2005. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

Money, cycles and capital formation: von Mises the ‘Austrian’ vs. Robertson the ‘Dynamist’

Lilia Costabile*

* Università degli Studi di Napoli Federico II

Address for correspondence: Professor L. Costabile, Università degli Studi di Napoli Federico II, Dipartimento di Scienze Economiche & Sociali, via Cinthia 45, Monte S Angelo, 80126 Naples. Italy; email: costabil{at}unina.it

A ‘disequilibrium’ between saving and investment decisions determines a maladjustment in production, the disruption of capital, and a downturn in economic activity, according to the ‘Austrian’ approach. By contrast, the ‘Dynamists’ argue that it may lead to economic growth, as disequilibrium may well be instrumental to capital accumulation. What explains these different predictions in otherwise similar models? The key is in the interplay between the analytical features and the ideological options underlying each of these approaches: alternative lines of thought, entirely compatible with their analytical models, were abandoned by some of these authors when they conflicted with their pre-analytical views. This paper illustrates the argument by exploring the models of two ‘fathers’, von Mises and Robertson.

Key Words: Growth • Banking policy • Consumers' sovereignty • Disequilibrium • cycles

JEL classifications: B3, E2, E5

Manuscript received February 28, 2003; final version received January 15, 2004.


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