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Central banking: political opportunism or economic necessity?
Donelle, Justin ; Cahlík, Tomáš (advisor) ; Hlaváček, Jiří (referee)
Throughout history, at multiple times, countries have implemented central banking systems by monopolizing currencies. The following study looks at key indicators such as bond yields, central bank legislation and free banking era legislation to identify whether changes were due to economic necessity or political opportunism on the part of politicians. The study will analyze 5 countries, most notably Australia, Sweden, Switzerland, United States and Scotland, all of which have had a free banking period and can shed some light on the topic of transition from a free banking system to a centralized monopoly. The comparison draws light on the diverse problems and challenges that arose, most notably finding that in the majority of cases, government intervention caused the banking system to become unstable and help governments to engage in large debt financing under the central banking era. Keywords: Free Banking; Rent-Seeking; Comparative Banking Systems; Central Banks; Political Economy of Monetary Institutions JEL Classification: B53, E02, E42, E44, F59, N13, N14, N11, N12, N21, N22, N23, N24
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The Role of the Interest Rate in Causing the Great Depression
Ali, Bano ; Ryska, Pavel (advisor) ; Cahlík, Tomáš (referee)
This thesis analyzes the major causes of the severe economic depression appeared in 1930s. It focuses on the role of the interest rate in its causing and the duration of it. The aim is to - through the comparison of three economic schools - Keynesians, Austrians, and Monetarists - show the different views of understanding the interest rate as such and then apply them on the situation before and during the crisis to explain various perspectives on its role in possible causing of the contraction of economic activity in a process of the business cycle. The comparison outlines, how deeply individual schools differ. While Keynesians considered the dear money and high interest rates as the main cause of the crisis and similarly to Monetarists, they both suggested keeping them on low level, Austrians promptly refused the policy of low interest rates. Further, firstly, it shows the inverse relationship between the growth of money supply and interest rates in 1920s and proves that the decrease of interest rates was caused to large extent by the increased quantity of money. Secondly, it provides the evidence that the growth of money supply and of investment spending was larger than the growth of gross domestic product.
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Central banking: political opportunism or economic necessity?
Donelle, Justin ; Cahlík, Tomáš (advisor) ; Hlaváček, Jiří (referee)
Throughout history, at multiple times, countries have implemented central banking systems by monopolizing currencies. The following study looks at key indicators such as bond yields, central bank legislation and free banking era legislation to identify whether changes were due to economic necessity or political opportunism on the part of politicians. The study will analyze 5 countries, most notably Australia, Sweden, Switzerland, United States and Scotland, all of which have had a free banking period and can shed some light on the topic of transition from a free banking system to a centralized monopoly. The comparison draws light on the diverse problems and challenges that arose, most notably finding that in the majority of cases, government intervention caused the banking system to become unstable and help governments to engage in large debt financing under the central banking era. Keywords: Free Banking; Rent-Seeking; Comparative Banking Systems; Central Banks; Political Economy of Monetary Institutions JEL Classification: B53, E02, E42, E44, F59, N13, N14, N11, N12, N21, N22, N23, N24
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Maturity mismatching and its impact on the yield curve
Němec, Petr ; Potužák, Pavel (advisor) ; Janíčko, Martin (referee)
This diploma thesis deals with a new discord in the Austrian economic theory about the effects of maturity mismatching practiced by banks on the shape of the yield curve and defines the not yet established concept of the natural yield curve. The conflicting contributions of Austrian authors are compared for that purpose. Based on this comparison, a coherent theory of the effects of maturity mismatching is presented in a framework of the loanable funds market. A definition of the natural yield curve is then produced by a synthesis of the above-mentioned findings and the Austrian theory of the natural rate of interest. Theoretical research leads to the conclusion that one form of maturity mismatching inevitably results in an Austrian business cycle. The empirical section examines the question of yield curve´s behavior under the influence of maturity mismatching. An explanation concerning the selected hypotheses and their lack of confirmation is given.
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Validation of Utility Theory of a Consumer in Practice
Kašpárková, Ivana ; Svoboda, Roman (advisor) ; Šrédl, Karel (referee)
This bachelor thesis is focused on validating of Utility Theory of a Consumer in practice. The aim of this work is to confirm or disprove the theory of decreasing marginal utility on the two test groups of respondents coresponding to a pre-prepared questionnaire.
The work is divided into two main parts first is a theoretical and second is a practical. The theoretical part is devoted to the authors, who were stadied to the issue of consumer behavior from the past until present.
These findings are used to develop questionnaires and subsequent elaboration of the practical part. In the practical part are analyzed using a graphical representation individual responses to the questionnaire from two interviewees groups. These data lead to the evaluation of whether the theory of diminishing marginal utility confirmed or not. Average utility are further processed in statistical calculations to compare whether the average utility in the two groups tested statistically significantly different or are the same average utility.
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Kapitál a monetární teorie hospodářského cyklu: Eseje o rakouské teorii kapitálu, úroku a hospodářském cyklu
Potužák, Pavel ; Ševčík, Miroslav (advisor) ; Holman, Robert (referee) ; Kubíček, Jan (referee)
This dissertation explores four big topics in the Austrian economic theory. Chapter 1 elucidates the Austrian theory of capital. It introduces basic tools that are further used in the analysis of the business cycle. It also clarifies some misunderstandings in this theory. Chapter 2 investigates the evolution of the interest rate over the business cycle that is predicted by the Austrian theory of economic fluctuations. Chapter 3 examines the pure time preference theory. It shows with the help of a simple neoclassical graphical and mathematical apparatus that there is a fundamental flaw in this theory. It suggests that the notions of want and good must be explicitly separated, and it concludes that the time preference as well as the subjective exchange ratio between present goods and future goods may take on any value. Chapter 4 explores the business cycle dynamics in the economy with permanently rising natural output. Simple monetary policy rule that was designed to eliminate economic fluctuations is discussed in detail.
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Pure time preference theory of interest analysis
Kos, Michael ; Doležal, Ondřej (advisor) ; Štekláč, Jiří (referee)
The following thesis analyses the pure time preference theory of interest. First, the major elaborations of the theory are compared. It is concluded that the Misesian approach to time preferences involves many factual differences in contrast to that of Fetter. The second part proceeds from Murphy´s and Potužák´s neoclassical critique to argue against conclusions based on the imaginary construct of evenly rotating economy. Two arguments are made suggesting that if reached, the evenly rotating economy would not isolate the pure time preference alone in the form of market interest rate.
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Financial Crisis and Methodology of Economics
Kovanda, Lukáš ; Pavlík, Ján (advisor) ; Loužek, Marek (referee) ; Bažantová, Ilona (referee)
The thesis deals with significant moments in the relationship between methodology of economics and implications of the financial crisis culminating in 2008 and 2009. Its key insight rests upon the claim that some theoretical concepts developed within mainstream economics do not tackle the reality adequately and contributed in a significant way to the sequence of events leading to the financial crisis. Most of those concepts were introduced in the second half of the 20th century, during a "high tide" of positivistic ideas in the domain of methodology of mainstream economics. Though the same ideas had been already discredited to a large extent by the philosophy of science at the time, mainstream economists did not reflect it satisfactorily. Aside from a historical expose the thesis consists also of an outline of a possible future development of the prevailing form of economic theory; four scenarios of future potential development are presented. In the final parts of the thesis, which are focused more specifically, the author appraises negatively options of the Austrian School as well as post-Keynesianism to influence in a more significant manner the mainstream economics during the post-crisis era.
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Raising the minimum wage and the Austrian apriorism
Panýr, Jakub ; Špecián, Petr (advisor) ; Brožová, Dagmar (referee)
This thesis deals with a problem of a relationship between minimum wage and potential consequent unemployment. While solving it, I am trying to connect apriorism of the misesian branch of the Austrian school and a Bayesian approach. It will enable us to correct our subjective belief in certain hypothesis with regard to the new facts which may appear. Sentences of the Austrian school about a certain positive relationship between raising the minimum wage and unemployment of unskilled workers, based on claiming about a synthetic a priori character of these sentences, seems as not so convincing, after confrontation with the Bayesian epistemology and facts from other disciplines. Then I am trying to show, that refusing of a quantification of unique events seems to be wrong and not coherent with callings of the Austrian school for "realistic" foundaitons. The Austrian school may according to these findings give up its claim about unchallengeable certainty of its theories, and complement it with a healthy dose of this Bayesian approach.
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Potential of Bitcoin from the view of Austrian school
Šembera, Tomáš ; Potužák, Pavel (advisor) ; Čermáková, Klára (referee)
The bachelor thesis deals with potential of digital currency Bitcoin to become universally accepted medium of exchange and with advantages, which its usage would bring to economy. In the thesis there are analysed factors important for its future progression. There are identified both positive and negative factors. Among the positive ones there is pseudonymity, low transaction costs, protection against government actions and inovative potential in the field of financial services. Among the negative ones there is the question of the system security, network effect, the risk of government against Bitcoin itself and high volatility. Volatility of bitcoin valu is identified as the major disadvantage of the currency. Next part of theoretical part deals with the confusion about virtual currencies and regression theorem. Logical analysis suggests that this confusion is caused by wrong interpretation of regression theorem, which is mostly caused by improper understanding of the term direct use. In the next part, Bitcoin is analysed from the view of the Austrian business cycle theory. Because of the inability of performing credit expansion, Bitcoin is identified as currency significantly limiting the strenght of business cycles. Practical part analysis the developement of volatility in time and its dependence on events and spekulative demand. The hypothesis, that high volatility of bitcoin value is caused by immaturity of the technology is not confirmed.
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