January, 2016

The Microfoundations of Austrian Economics through a New Classical Theoretical Lens

  • Paul Dragos Aligica

    Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
  • Anthony Evans

    Assistant Professor of Economics, ESCP-EAP European School of Management
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Find the paper at tandfonline.com.

This paper is an attempt to contribute to the microfoundations debate by discussing the distinctive methodological characteristics of the Austrian school, and how they relate to different conceptions of equilibrium and general equilibrium models. Further, we shall focus on one specific branch of the Austrian school (those who see markets as exhibiting equilibrating tendencies) and one specific branch of neoclassical economics (the New Classical School) to highlight some hitherto overlooked points of tangency. Indeed, we shall use the monetary theories of Hayek and Lucas to argue that the limitations of New Classical models may lead to Austrian solutions.