An Alternative Austrian Economics Theory of The Business Cycle

Abstract Book of the 11th International Conference on Advanced Research in Business, Management and Economics

Year: 2026

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An Alternative Austrian Economics Theory of The Business Cycle

Youliy Ninov

ABSTRACT:

This article offers a new, alternative Austrian economics theory of the business cycle. The economic boom is explained by the inclusion of untapped marginal and sub-marginal economic resources, which would be too costly to use under normal growth conditions. It is shown how the latter is possible only with a growing rate of monetary expansion. Thus, the business cycle is presented as an attempt to grow the economy extensively, which is bound to fail. From a structural point of view, the economic boom is explained by the introduced discrepancy between the rate of profit and the rate of interest. Finally, a graphical description of the business cycle is presented, showing how credit expansion causes the economy to grow and shrink as a whole.

Keywords: Business Cycle Theory, Capital Theory