Portal:Austria/Selected article/17

The Austrian business cycle theory (or ABCT) attempts to explain business cycles through a set of ideas held by the Austrian School of economics. The theory views business cycles as the inevitable consequence of excessive growth in bank credit, exacerbated by inherently damaging and ineffective central bank policies, which cause interest rates to remain too low for too long, resulting in excessive credit creation, speculative economic bubbles and lowered savings. The creators of the Austrian business cycle theory were Austrian School economists Ludwig von Mises and nobel laureate Friedrich Hayek. Hayek won a Nobel Prize in economics in 1974 (shared with Gunnar Myrdal) in part for his work on this theory.