Monday, October 13, 2014

Tirole Has No Understadning of How the Business Cycle Develops

The new Nobel Laureate in economics, Jean Tirole, wrote in a 1982 paper:
It is argued that price bubbles rely on the myopia of traders and they disappear if traders adopt a truly dynamic maximizing behavior.
Which means that Tirole doesn't understand, in particular, how central bank manipulations of the money supply distort markets and interest rates, and make it impossible for traders and entrepreneurs to better understand underlying conditions.  And it means in a broader sense that Tirole doesn't come close to understanding Austrian School Business Cycle Theory.

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