THE RECESSION AND AUSTRIAN BUSINESS-CYCLE THEORY - AN EMPIRICAL PERSPECTIVE

How well is Austrian business cycle theory corroborated by empirical e vidence? This question is addressed by examining the contraction of 19 90-1991 and the expansion leading up to it. An overview of the Austria n theory of the business cycle permits the identification of several e mpirical propositions implied by the theory. Empirical data for severa l economic variables are examined for consistency with the patterns su ggested by the theory. The evidence suggests a muted Austrian cyclical process at work in conjunction with other factors during the time per iod studied.