Alexander W. Salter

A basic tenet of macroeconomics and monetary economics is the difference between nominal variables and real variables. Nominal variables are expressed in current market prices. Real variables are adjusted to […]

The American economy is still in the doldrums.  It is growing and creating jobs at a snail’s pace compared to the years before the financial crisis.  There are several reasons […]

When discussing the market for money balances, many reputable macroeconomics and money and banking textbooks say that the price of money is the interest rate.  This ‘liquidity preference’ theory is […]

Many who are supportive of free markets blame central banks for the low interest rates that have prevailed since the end of the 2007-8 financial crisis.  This is a mistake. […]

Thanks in part to high-profile and controversial public policy since the financial crisis, and to a lesser extent politicians such as Ron and Rand Paul, the monetary and financial arrangements […]

In my previous post, I argued that the institutions underlying laissez-faire banking systems, as approximated by historical cases in Scotland, Canada, and Sweden (among others) provided market actors the incentives and […]

One of the most interesting areas within the analysis of governance regimes is the literature on polycentricity.  Polycentric governance systems are characterized by fractured and concurrent authority.  In other words, in polycentric systems, power is […]

Last time, I argued that the two chief components of Austrian business cycle theory (ABCT)—inconsistent consumption and investment plans engendered by faulty interest rate signals, and reallocation of resources during […]

Although Austrian business cycle theory (ABCT) is a powerful price-theoretic explanation for monetary-induced booms and busts, it is not without critics.  Indeed, many find ABCT implausible for two reasons.  The […]

As Steve Horwitz has shown, the insights of Austrian macroeconomics and monetary disequilibrium theory can be combined to yield a powerful paradigm for understanding how monetary policy affects the economy.  Crucial […]