Don Boudreaux on Macroeconomics and Austrian Business Cycle Theory

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4.7 • 4.3K Ratings

🗓️ 13 April 2009

⏱️ 69 minutes

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Summary

Don Boudreaux, of George Mason University, talks with EconTalk host Russ Roberts about the microfoundations of macroeconomics and the Austrian theory of business cycles. Boudreaux draws on Erik Lindahl's distinction between microeconomics and macroeconomics, emphasizing the difference between individual choices and the coordination of economic activity. Other topics include the Austrian view of capital and investment, the Austrian view of monetary policy, the issue of aggregation, and the intellectual successes of the Keynesians.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you. My guest today is Don Boudreau, chair of the economics department at
0:40.5	George Mason University. Don, welcome back to Econ Talk. Great to be here as always. Our topic
0:45.7	today is the Austrian view of business cycles and a macroeconomics generally. Don, that's a nice
0:51.5	microeconomist like you doing in a place like this. What does a micro have to do with macro
0:56.9	after all? That's a good question. I believe, and I think all right-thinking economists understand
1:06.2	that there is only one kind of economics. It's microeconomics, and it's my former teacher from
1:11.5	Auburn University, Roger Garrison himself, a well-known monetary macroeconomist often says that
1:18.6	all economics is microeconomics. There are just different questions we ask, and some of those
1:23.8	questions are classified as macro, for example, what causes inflation, what causes sustained
1:29.6	unemployment. Those are questions we conventionally classify as macroeconomic ones, but to understand
1:35.7	them, we should never depart from the microanalytics, the micro understanding that we have about
1:44.0	the way people respond to incentives and about the way markets equilibrate or disequilibrate
1:48.4	and theories of creative destruction, those matters. There are questions that we classify
1:57.6	conventionally in one way or another, but all economics is microeconomics. You were talking
2:03.7	before we started taping about what a strange historical episode we find ourselves in the middle
2:08.2	of. Yeah, I am a microeconomist. When I was an undergraduate, my chief interest after I was
2:19.4	attracted to economics, when I was a junior and senior, my chief interest was reading monetary
2:24.6	theory and macroeconomics. I quickly got away from that because it was really hard stuff, it's
	...

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