ABSTRACT
The traditional Austrian claim: Positive rates of nominal money growth induce unsustainable increases in long-term investment.
Traditional Austrian business cycle theories focus on the overexpansion of long-term investment as the relevant intertemporal coordination problem. We find this emphasis in the writings of Mises, Hayek, Rothbard, Garrison, and other presentations of Austrian cycle theory. Competing presentations of the Austrian theory offer differing accounts of exactly how and why these malinvestments cause business downturns, but the initial overexpansion of long-term investment is central to all versions of the theory.1
