A Comparative Study Of Hayek And Keynesian Business Cycle Theory

Business cycle theory has always been a hot topic in economics.As two great economists in the twentieth century,Hayek and Keynes have profound and sharp views on the theory of the business cycle.The two theories about business cycle are mostly embodied in their book "Price and Production" and "Employment,Interest and Currency General Theory ",the two books are also called classic economics.At home and abroad,the research on Hayek and Keynesianism has never ceased.According to the author's opinion,under the current background of new normal economy and weak growth in our country,we should study the mechanism of the occurrence and transmission of business cycle,Finding effective measures to deal with the economic crisis is far-reaching.Therefore,the author tries to make a comparative study of the business cycle theory and thought of these two great economists,hoping to clarify the two statements about the process of the business cycle and the transmission,and find out the two theories about the contradiction and unity of the economic cycle theory for our country to deal with the business cycle fluctuations provide some theoretical basis and policy recommendations.Hayek inherited the research results of the early Austrian schools and other schools of thought,published in 1929 and 1931,respectively,"Monetary Theory and Business Cycle" and "Price and Production",exhaustively elaborated on his business cycle thinking and theory.In his book,"Price and Production," Hayek shares four chapters on how the money supply can lead to fluctuations in the business cycle.These four chapters are also the contents of his speech at the invitation of Robbins.Hayek argues that the volatility of the economic cycle is the result of credit currency expansion caused by changes in interest rates,ie when the interest rate of interest is lower than the equilibrium interest rate.It concludes that the expansion of the money supply is the decisive factor in the economic crisis and the production structure Shorten the lead directly to the crisis.As interest rates rise and people's expectations for the future are optimistic,some savings will be increased to reduce the demand for consumer goods.The existence of voluntary savings will cause resources to flow to higher levels of capitalization during the production phase,which in turn will lead to a pull in the production structure long,reach a balanced state,promote economic growth.When the phenomenon of "compulsory savings" arises when the money supply increases,this man-induced growth of the production structure does not last long.When such over-sending money is converted into residents' income and the consumption demand increases,consumption will be caused the general rise in the price of goods and the prolonged production of capital goods will be unprofitable,which will lead to the disappearance of part of the production stage,the entire production stage inevitably shortened,leading to economic crisis.Therefore,Hayek's policy response to the economic cycle is a "neutral currency" policy.He believes that the expansion of production and trade can not justify a monetary expansion,nor advocate an increase in the money supply to fight the recession.In contrast,Keynes did not use a systematic theory to explain the phenomenon of business cycles as Hayek did.In his book The General Theory of Employment,Interest and Currency,Keynes explored the determinants of employment at any one moment,and use it to explain the business cycle.Keynes argued that the phenomenon of the business cycle is so complex that all the elements discussed in the book must be used in order to be fully explained,and of particular importance the propensity to consume,the preference for flexibility,and the marginal efficiency of capital,all of which play during the business cycle Keynes believes that the main reason for the fluctuation of the business cycle is the cyclical fluctuation of the marginal efficiency of capital and the regular movement of the economic cycle in terms of the length of time and the length of the period,mainly from the marginal efficiency of capital the resulting change is a line Keynes pointed out to study the business cycle.The collapse of the marginal efficiency of capital leads to the phenomenon of "panic",which in turn affects people's expectation in the future.When the pessimistic mood is filled,it will lead to a sudden drop in the amount of investment,the stock market will be sluggish and the propensity to consume will also be reduced.In the case of laissez-faire,unless there is a radical change in the psychology of the investment market,dramatic fluctuations in employment can not be avoided and Keynes concludes that we can not place the responsibility for determining the current volume of investment in private hands,thereby clarifying the policy ideas of his state intervention.To sum up,Hayek's business cycle theory seems to focus more on the impact of monetary factors on the production changes in the real economy,and Keynes seems to place more emphasis on psychological pessimism resulting from the collapse of the marginal efficiency of capital at the onset of the crisis Triggering a plunge in investment,a reduction in propensity to consume and unemployment.Although Hayek and Keynes are diametrically opposed to each other in the theory of business cycles,especially monetary theory and policy,they are not diametrically opposed.In keeping with the basic concept of a free and democratic market of law and order,Hayek and Keynes are There is no conflict and contradiction.So Hayek and Keynes theory although the difference mainly,but there are similarities and complementarities,this article attempts to Hayek and Keynesian business cycle theory is compared and analyzed,and draw the corresponding conclusions.This article attempts to comparative analysis of Hayek and Keynesian business cycle theory,and draw the corresponding conclusions,in order to solve the current economic downturn in China to bring inspiration and policy recommendations.This paper mainly uses the comparative argumentation,inductive conclusion method,through comparative analysis to find the Hayek and Keynes theory and its policy of economic cycle theory differences and complementarities.On the one hand,there are few domestic comparative studies on Hayek and Keynesian business cycle theory.This paper summarizes several transmission mechanisms in Hayek's business cycle theory and the Keynesian monetary transmission mechanism.On the other hand,based on the thorough reading of the original works,the author makes a complementarity analysis of the two theories and finds that Hayek and Keynes are not absolutely opposite to each other to a certain degree,and there exists a certain degree of certainty Similarities and complementarities.In addition,this article also interspersed analysis of two economic philosophy and philosophy.The dissertation is divided into six chapters.The first chapter is the introduction,which introduces the research background,significance and method.The second chapter is the literature review of the theoretical research.The third chapter gives an overview of the theories of Hayek and Keynes respectively.The fourth and fifth chapters are the focus of this article,the fourth chapter focuses on the analysis of the difference between Hayek and Keynes theory of the economic cycle,the fifth chapter focuses on the analysis of the Hayek and Keynes theory of the complementarity and similarity.The sixth chapter is Hayek and Keynes theory of business cycle to our current enlightenment and advice.