July, 2016

Towards a New Austrian Macroeconomics

  • Vipin Veetil

    Assistant Professor, Indian Institute of Technology Madras
  • Lawrence H. White

    Distinguished Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics
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Find the article at Springer Link.

Austrian macroeconomists of the interwar period saw the economy as a complex adaptive system, in which macroeconomic variables emerge from the interaction between millions of purposefully acting agents. Recent advances in computation technology allow us to build empirically salient synthetic economies in silico, and thereby formalize many Austrian insights. We present a workhorse model with firms on an input-output network. Macroeconomic variables evolve through the interaction between micro-economic decisions. We use the model to explain an effect of monetary shocks on the price distribution and provide a sketch of other potential applications.