Hayek's Average Period of Production: One Step Forward and a Missed Opportunity

2018 ◽  
Author(s):  
Nicolas Cachanosky ◽  
Peter Lewin
Keyword(s):  
Average Period ◽  
One Step ◽  
Average Period Of Production ◽  
Missed Opportunity

Adolphe Landry and Irving Fisher on Circulation and Interest

2012 ◽  
pp. 115-123
Author(s):  
Robert W. Dimand
Keyword(s):  
World War I ◽  
Average Period ◽  
World War ◽  
Interest Theory ◽  
Quantity Theory ◽  
The Us ◽  
Average Period Of Production

In the two decades before World War I, Irving Fisher and his French contemporary Adolphe Landry presented and extended Boehm-Bawerk's theory capital and interest, although both of them criticized Boehm-Bawerk's concept of an average period of production. They analyzed each other's work on interest theory in books reviews and books. They both attempted to construct an operationally meaninful version of the quantity theory of money, with Fisher building explicitly on early studies by Landry and Pierre des Essars in France and by Edwin Kemmerer and David Kinley in the US.

A financial framework for understanding macroeconomic cycles

2016 ◽  
Vol 8 (2) ◽  
pp. 268-280 ◽  
Author(s):  
Peter Lewin ◽  
Nicolas Cachanosky
Keyword(s):  
Business Cycles ◽  
Design Methodology ◽  
Average Length ◽  
Market Mechanism ◽  
Average Period ◽  
Conceptual Approach ◽  
Content Type ◽  
Asset Bubbles ◽  
Financial Framework ◽  
Average Period Of Production

Purpose A comprehensive understanding business cycles needs to account not only for the allocation of resources over time but also for resource allocation across industries at any point in time. But to properly understand how these “time-distortions” take place and how the price mechanisms that drive them work, a clear and well-defined conceptualization of the “average length” of the structure of production is required. The authors use insights provided by Macaulay’s duration and Hicks’s average period to show that financial duration and related concepts have a direct connection to macroeconomic stability. Design/methodology/approach This study uses a theoretical and conceptual approach. It first presents the connection between average period of production and financial duration and then compares and applies this to macroeconomic business cycle theories. Findings This study points to important implications for macroeconomic policy. It not only claims that a low interest rate contributes to the creation of asset bubbles but also shows the market mechanism through which the real sector is affected. The application of financial concepts to macroeconomic cycles shows the price mechanism through which resources are allocated across industries. Originality/value The financial approach we offer to business cycles is fairly unexplored. As such, this paper offers a novel conceptual and theoretical framework for business cycles.

THE AVERAGE PERIOD OF PRODUCTION: THE HISTORY AND REHABILITATION OF AN IDEA

2018 ◽  
Vol 40 (1) ◽  
pp. 81-98 ◽  
Author(s):  
Peter Lewin ◽  
Nicolás Cachanosky
Keyword(s):  
Economic Life ◽  
Average Period ◽  
Blind Alley ◽  
Capital Theory ◽  
Austrian Capital Theory ◽  
History Of ◽  
Austrian Capital ◽  
Average Period Of Production ◽  
The Business Cycle ◽  
Value Measure

Austrian capital theory tried to capture the intuitive and basically undeniable importance that time plays in economic life, but arguably was diverted down a blind alley with Eugen von Böhm-Bawerk’s average period of production, a purely physical measure of ‘roundaboutness’—the length of the production process. For the general case, such a measure is a chimera. But the intuition is strong, and the idea survived and reappeared at various points in the history of capital theory. Almost unknown to economists, an alternative value measure of roundaboutness has existed at least since John Hicks’s formulation of his average period (AP) in 1939, which, coincidentally, was exactly the same measure discovered by the financial actuary Frederick Macaulay in 1938, called by him “Duration” (D). Macaulay’s D, more richly interpreted as Hicks’s AP, is a measure that more appropriately captures what it was that the Austrians struggled to express over many years in their capital theory and in their analysis of the business cycle.

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