A Vicious Cycle of Manias, Crises and Asymmetric Policy Responses an Overinvestment View

@article{Hoffmann2009AVC,
  title={A Vicious Cycle of Manias, Crises and Asymmetric Policy Responses an Overinvestment View},
  author={Andreas Hoffmann and Gunther Schnabl},
  journal={ERN: Monetary Policy Objectives; Policy Designs; Policy Coordination (Topic)},
  year={2009}
}
  • A. Hoffmann, G. Schnabl
  • Published 1 November 2009
  • Economics
  • ERN: Monetary Policy Objectives; Policy Designs; Policy Coordination (Topic)
The business cycles theories of Wicksell (1898), Schumpeter (1912), Mises (1912), Hayek (1929, 1935) and Minsky (1986, 1992) explain business cycles by distorted prices on capital markets, buoyant credit expansion and overinvestment. The exuberance during the boom endogenously causes the subsequent slump. While these theories put the emphasis on explaining the emergence of the cycle, this paper focuses on the macroeconomic policy responses during and after the crisis, when panic tightens credit… 

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