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How can we anticipate crises?

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  • Vieru, Elena Bianca

Abstract

Every crisis should teach us a valuable lesson. However, it seems that we learn almost nothing since they still occur from time to time strongly affecting the world economies. The basic question from where we started our research and to which we tried to answer as clearly as possible is the following: How can we anticipate future crises before they begin to make their presence felt on the global economic scene? The answer is both simple and handy, as the most consistent and relevant explanations in this regard come from the Austrian School of economics. We refer, in particular, to the theory of business cycle. Analyzing this problem, we discovered multiple causes, or better said clues that might help us anticipate and recognize the onset time of economic recessions. We will focus on two of them, considered to be the most important ones. The first clue is closely linked to an expansionary monetary policy that led to a deterioration of credit and to inflation. The second sign that we will be argued in this paper, a sign in close connection with the first clue, is due to the application of protectionist measures or, in other words, the second cause was actually the state’s interventionism.

Suggested Citation

  • Vieru, Elena Bianca, 2011. "How can we anticipate crises?," MPRA Paper 41440, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:41440
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    File URL: https://mpra.ub.uni-muenchen.de/41440/1/MPRA_paper_41440.pdf
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    References listed on IDEAS

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    1. Klausinger, Hansjörg, 2003. "The Austrians on Relative Inflation as a Cause of Crisis," Journal of the History of Economic Thought, Cambridge University Press, vol. 25(2), pages 221-237, June.
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    Cited by:

    1. Elena Bianca Vieru, 2013. "The Forgotten Austrian Economics Language," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 9(1), pages 168-180, February.

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    More about this item

    Keywords

    Austrian School; business cycle; crisis; expansion; interventionism;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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