by Jonathan Newman
Steven Horwitz has written about the limits of Austrian Business Cycle Theory (ABCT). He outlines three limits of ABCT as he sees it:
- “[ABCT] tells us nothing about exactly when the boom will break or the precise factors that will cause it.”
- “ABCT tells us little to nothing about how the bust will play out.”
- “Not every recession requires the ABCT as an explanation, nor can the ABCT explain everything about any particular recession.”
Horwitz then proposes that we take a broader approach to explaining business cycles, including monetarism, regime uncertainty, and the effects of intervention. He has brought up great points that can lead us to a discussion not just on business cycles, but the nature of economics and history.