1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar
Source link: http://archive.mises.org/5072/working-paper-post-new-economy/

Working Paper: Post New Economy

May 19, 2006 by

A Perspective on Post New Economy Business Cycle Behavior by Joseph Calandro (University of Connecticut)

By mid-to-late 2001 the NASDAQ Index retraced virtually all of the gains it had achieved during the “new economy” boom. For many market participants that market behavior signaled the end of business cycle activity in the U.S. economy. We apply Austrian Business Cycle Theory to post-new economy market behavior and show how, via expansion of the money supply as measured by M3 and expansion of the national debt, business cycle activity is continuing in the U.S. economy, albeit in a different form. This position is illustrated in an examination of the price behavior of the NASDAQ Index, real estate market, oil market, and gold market. Subsequent to this discussion it is shown how to integrate business cycle analysis with value-based indicators such as low dividend yields and low price-to-earnings ratios to enhance traditional forms of investment analysis. Note that this is not a paper on investment technique; rather, it explains and demonstrates a practical application of business cycle theory.

FULL PAPER

{ 7 comments }

M E Hoffer May 20, 2006 at 6:20 pm

I found Colandro’s paper to be good overview/primer on ABCT. Well-written and lucid, it applied ABCT, in a cogent way, to recent economic history.

As a matter of fact, I forwarded a “copy” to my cousin who is currently matriculating, at t.u., with aim to be a “capitalist”. I thought a good dose of ABCT, at the minimum, would help him steer clear of Keynesian induced potholes.

Colandro does, one and all, a favor by sharing his good work.

E. Church May 20, 2006 at 8:46 pm

This article is excellent, please post more like it. I read this blog/site looking to educate myself in the Austrian school of economics. The books in the study guide are great, but having current phenomenon explained in Austrian terms is fantastic. I’ve gotten to the point where I don’t read most of the libertarian/anti-statist articles on here anymore, not because I disagree, but because you’re ‘preaching to the choir’ – I’m usually already in complete agreement. However, this kind of article will have me coming back for more.

jeffrey May 20, 2006 at 9:35 pm

If Mises.org were only “preaching to the choir,” I would hate to hear what that choir is singing: the music would be filled with extreme dissonance, wrong notes, various tempos, and…well, let’s just block the metaphor and say that it is a radical diverse and wide readership, a claim made based on all available evidence.

N. Joseph Potts May 21, 2006 at 5:09 pm

Jeffrey -
I think E. Church MEANT that fundamental anti-statist (libertarian) themes were “preaching to the choir” with regard to HIM (or her).
I didn’t infer that he felt there was no value in them, or in publishing them in this or other venues, just that in his own case, he felt little compulsion to read them.
For my part, I read the (numerous) better items in this (libertarian) theme largely to buttress my ability to project and defend them in conversation with others to whom the economic side has less appeal (the economic side has GREAT appeal to me).
But each of us fights the battle on a different front, so to speak, and if E. Church chooses to concentrate his strength and growth on the economic side, I say God bless him – this campaign is long and wide enough to benefit from both generalists and specialists of every type, kind, size, and color. And gender.

jeffrey May 21, 2006 at 7:21 pm

Yes, NJP, I reread his post and you are precisely right.

olmedo May 22, 2006 at 9:57 pm

good……but still not very austrian.

this paper is kind like Austrian Economics meets technical analisis.

Yes, it shows the relationship between money pumping and the stock market bubble but ,in order to become a real ABCT analisis, it has to show how this monetary expansion afected the “struture” of the real economy in a sector by sector basis….. all the way from raw materials to the final stages of prduction. how were capital and profits were allocated (or mis-allocatted) between these sectors.

I applaud the effort to anchor economic theory to the real world. Thats the way economics should be and , fortunately, austrians (unlike neoclasical ) do have the tools to do it but, use them, please!!!!!

olmedo

Joseph Calandro, Jr. May 28, 2006 at 5:58 pm

I would like to thank the above bloggers. It is always gratifying when others read your work, but it extremely gratifying when those who read it, like it. Re the comment that the paper is a combination of Austrian Economics and technical analysis; the paper is, essentially, a synthesis of ABCT and Graham & Dodd investment theory. Charts are used solely to amplify the analysis.

Comments on this entry are closed.

Previous post:

Next post: