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Austrian Business Cycle Theory and the Recession of 2007-2009 in the US Economy
Stračina, Jakub ; Ryska, Pavel (advisor) ; Mejstřík, Michal (referee)
This paper aims to evaluate merits of the Austrian business cycle theory in explaining the 2001-2009 business cycle in the US economy. The theory postulates that a monetary shock upsets equilibrium in the market for loanable funds and adversely influences coordination mechanisms of the economy. The structure of relative prices is distorted and resources are misallocated as a result. The economy follows an unsustainable investment trajectory inconsistent with the amount of available resources and with the consumer preferences. When the inconsistencies are revealed, some of the investments are liquidated and costly correction follows. After providing exposition of the theory and description of the US economy in 2001-2009, the theory is confronted with the data. Although some deviations are conceded, mainly in development of the labor market, analysis presented in the paper supports the Austrian business cycle theory as a solid theoretical tool for explanation of the economic development throughout the examined period. The theory exhibits its main strengths in accounting for development of relative prices and linking them to conditions in the market for loanable funds.
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The element of individual choice in penzion reform : cases of Argentina and Chile
Stračina, Jakub ; Hedbávný, Petr (advisor) ; NÁHRADNÍ, OPONENT (referee)
This paper deals with a specific reform of a defined-benefit pay-as-you-go pension system. Namely, it is the one that completely or partially replaces the old system, with a fully funded defined contribution component. Its aim is to examine the element of individual choice embodied in the reform. Pension system participants face a choice of whether to switch to the new system or remain participants of the old one. In theoretical part of the paper, we show how reforms can be classified according to how "right to choice" is granted and denied to various groups of pension system participants. Replacing pay-as-you-go pension system with a fully funded component entails implicit social security debt of the old system turning explicit. Another objective of this paper is thus to match possible distributions of "right to choice" with corresponding kind of social security debt that turns explicit. The last objective is to state the individual decision making problem of a worker facing the reform. There are two major decisions to be made. First, the worker is to select the optimal switching strategy (switch or not to switch). Second, the worker can optimize his/her contribution path throughout productive life. Conclusion of the switching problem analysis is that given the values of all parameters expected by the...
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Austrian Business Cycle Theory and the Recession of 2007-2009 in the US Economy
Stračina, Jakub ; Ryska, Pavel (advisor) ; Mejstřík, Michal (referee)
This paper aims to evaluate merits of the Austrian business cycle theory in explaining the 2001-2009 business cycle in the US economy. The theory postulates that a monetary shock upsets equilibrium in the market for loanable funds and adversely influences coordination mechanisms of the economy. The structure of relative prices is distorted and resources are misallocated as a result. The economy follows an unsustainable investment trajectory inconsistent with the amount of available resources and with the consumer preferences. When the inconsistencies are revealed, some of the investments are liquidated and costly correction follows. After providing exposition of the theory and description of the US economy in 2001-2009, the theory is confronted with the data. Although some deviations are conceded, mainly in development of the labor market, analysis presented in the paper supports the Austrian business cycle theory as a solid theoretical tool for explanation of the economic development throughout the examined period. The theory exhibits its main strengths in accounting for development of relative prices and linking them to conditions in the market for loanable funds.
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