Merger Waves and the Austrian Business Cycle Theory

This paper identifies merger waves as parts of Austrian-type business cycles. According to Austrian business cycle theory, when loan rates are reduced below their natural level through bank credit expansion, this falsifies the monetary calculation of capitalist-entrepreneurs, and investments are ini...

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Autores:
Saravia, Jimmy
Tipo de recurso:
Fecha de publicación:
2014
Institución:
Universidad EAFIT
Repositorio:
Repositorio EAFIT
Idioma:
eng
OAI Identifier:
oai:repository.eafit.edu.co:10784/7624
Acceso en línea:
http://hdl.handle.net/10784/7624
Palabra clave:
Austrian business cycle
merger waves
Austrian
neoclassical
behavioral
Rights
License
restrictedAccess
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oai_identifier_str oai:repository.eafit.edu.co:10784/7624
network_acronym_str REPOEAFIT2
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repository_id_str
spelling 20142015-11-06T21:15:37Z20142015-11-06T21:15:37Z1098-3708http://hdl.handle.net/10784/7624This paper identifies merger waves as parts of Austrian-type business cycles. According to Austrian business cycle theory, when loan rates are reduced below their natural level through bank credit expansion, this falsifies the monetary calculation of capitalist-entrepreneurs, and investments are initiated that calculation showed were not profitable before the interest rate reduction. Since there are not enough resources in the economy to complete the new projects, businesses must increasingly withdraw the resources from other companies. Thus, this paper concludes that the increase in investment activity and the resulting “resource crunch” cause a merger wave that helps prolong the boom phase of the cycle. The merger wave ends when the credit expansion is not sufficient to sustain the economic boom, and the bust phase begins. Conversely, this paper concludes that if the fiduciary media do not enter the economy through the loan market to finance business investment, there is no pronounced and sustained increase in merger activity.engMises InstituteThe Quarterly Journal of Austrian Economics. Vol. 17, (2), 2014, pp.179-196https://mises.org/library/merger-waves-and-austrian-business-cycle-theoryhttps://mises.org/library/merger-waves-and-austrian-business-cycle-theoryrestrictedAccessAcceso restringidohttp://purl.org/coar/access_right/c_16ecThe Quarterly Journal of Austrian Economics. Vol. 17, (2), 2014, pp.179-196Merger Waves and the Austrian Business Cycle Theoryarticleinfo:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionArtículopublishedVersionObra publicadahttp://purl.org/coar/version/c_970fb48d4fbd8a85http://purl.org/coar/resource_type/c_6501http://purl.org/coar/resource_type/c_2df8fbb1Austrian business cyclemerger wavesAustrianneoclassicalbehavioralEconomía y FinanzasFinanzasSaravia, JimmyCenter for Research in Economics and Finance (CIEF), Universidad EAFIT, Medellín, ColombiaGrupo de Investigación Finanzas y BancaThe Quarterly Journal of Austrian Economics17217919610784/7624oai:repository.eafit.edu.co:10784/76242015-11-06 16:15:37.099metadata.onlyhttps://repository.eafit.edu.coRepositorio Institucional Universidad EAFITrepositorio@eafit.edu.co
dc.title.eng.fl_str_mv Merger Waves and the Austrian Business Cycle Theory
title Merger Waves and the Austrian Business Cycle Theory
spellingShingle Merger Waves and the Austrian Business Cycle Theory
Austrian business cycle
merger waves
Austrian
neoclassical
behavioral
title_short Merger Waves and the Austrian Business Cycle Theory
title_full Merger Waves and the Austrian Business Cycle Theory
title_fullStr Merger Waves and the Austrian Business Cycle Theory
title_full_unstemmed Merger Waves and the Austrian Business Cycle Theory
title_sort Merger Waves and the Austrian Business Cycle Theory
dc.creator.fl_str_mv Saravia, Jimmy
dc.contributor.department.spa.fl_str_mv Economía y Finanzas
Finanzas
dc.contributor.author.spa.fl_str_mv Saravia, Jimmy
dc.contributor.affiliation.spa.fl_str_mv Center for Research in Economics and Finance (CIEF), Universidad EAFIT, Medellín, Colombia
dc.contributor.program.spa.fl_str_mv Grupo de Investigación Finanzas y Banca
dc.subject.keyword.eng.fl_str_mv Austrian business cycle
merger waves
Austrian
neoclassical
behavioral
topic Austrian business cycle
merger waves
Austrian
neoclassical
behavioral
description This paper identifies merger waves as parts of Austrian-type business cycles. According to Austrian business cycle theory, when loan rates are reduced below their natural level through bank credit expansion, this falsifies the monetary calculation of capitalist-entrepreneurs, and investments are initiated that calculation showed were not profitable before the interest rate reduction. Since there are not enough resources in the economy to complete the new projects, businesses must increasingly withdraw the resources from other companies. Thus, this paper concludes that the increase in investment activity and the resulting “resource crunch” cause a merger wave that helps prolong the boom phase of the cycle. The merger wave ends when the credit expansion is not sufficient to sustain the economic boom, and the bust phase begins. Conversely, this paper concludes that if the fiduciary media do not enter the economy through the loan market to finance business investment, there is no pronounced and sustained increase in merger activity.
publishDate 2014
dc.date.issued.none.fl_str_mv 2014
dc.date.available.none.fl_str_mv 2015-11-06T21:15:37Z
dc.date.accessioned.none.fl_str_mv 2015-11-06T21:15:37Z
dc.date.none.fl_str_mv 2014
dc.type.eng.fl_str_mv article
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
dc.type.coarversion.fl_str_mv http://purl.org/coar/version/c_970fb48d4fbd8a85
dc.type.coar.fl_str_mv http://purl.org/coar/resource_type/c_6501
http://purl.org/coar/resource_type/c_2df8fbb1
dc.type.local.spa.fl_str_mv Artículo
dc.type.hasVersion.eng.fl_str_mv publishedVersion
dc.type.hasVersion.spa.fl_str_mv Obra publicada
status_str publishedVersion
dc.identifier.issn.none.fl_str_mv 1098-3708
dc.identifier.uri.none.fl_str_mv http://hdl.handle.net/10784/7624
identifier_str_mv 1098-3708
url http://hdl.handle.net/10784/7624
dc.language.iso.eng.fl_str_mv eng
language eng
dc.relation.ispartof.spa.fl_str_mv The Quarterly Journal of Austrian Economics. Vol. 17, (2), 2014, pp.179-196
dc.relation.isversionof.none.fl_str_mv https://mises.org/library/merger-waves-and-austrian-business-cycle-theory
dc.relation.uri.none.fl_str_mv https://mises.org/library/merger-waves-and-austrian-business-cycle-theory
dc.rights.eng.fl_str_mv restrictedAccess
dc.rights.coar.fl_str_mv http://purl.org/coar/access_right/c_16ec
dc.rights.local.spa.fl_str_mv Acceso restringido
rights_invalid_str_mv restrictedAccess
Acceso restringido
http://purl.org/coar/access_right/c_16ec
dc.publisher.eng.fl_str_mv Mises Institute
dc.source.spa.fl_str_mv The Quarterly Journal of Austrian Economics. Vol. 17, (2), 2014, pp.179-196
institution Universidad EAFIT
repository.name.fl_str_mv Repositorio Institucional Universidad EAFIT
repository.mail.fl_str_mv repositorio@eafit.edu.co
_version_ 1814110170478804992

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