Austrian School
Definition of 'Austrian School'An economic school of thought that originated in Vienna during the late 19th century with the works of Carl Menger. The Austrian school is set apart by its belief that the workings of the broad economy are the sum of smaller individual decisions and actions, unlike the Chicago school and other theories that look to surmise the future from historical abstracts, often using broad statistical aggregates.Also known as the "Vienna school" and the "psychological school". |
|
Investopedia explains 'Austrian School'The Austrian school holds a special view of the modern business cycle; it contends that boom cycles are actually a misallocation of capital resources caused by interfering monetary policy. When central banks effectively expand the money supply by lowering interest rates, it creates an multiplying effect in the economy. This leads business owners to incorrectly assess the amount of available capital and the level of demand by consumers. Eventually, overinvestment by corporations leads to a "bust" cycle in which prior misallocations must be worked out. |
Related Definitions
Articles Of Interest
-
Nobel Winners Are Economic Prizes
Before you try to profit from their theories, you should learn about the creators themselves. -
Get An Academic Finance Career
Working nine months a year and earning a six-digit salary might seem like the high life, but these jobs are not easy to come by. -
Explaining The World Through Macroeconomic Analysis
From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone. -
The Importance Of Inflation And GDP
Learn the underlying theories behind these concepts and what they can mean for your portfolio. -
Is Biased Investing Holding You Back?
Risk aversion seems to come to us naturally, preventing us from stepping into unfamiliar territory. But feeling comfortable isn't always the best thing for your portfolio. -
How Risk Free Is The Risk-Free Rate Of Return?
This rate is rarely questioned - unless the economy falls into disarray. -
Top 4 Most Scandalous Insider Trading Debacles
Here we look at some of the landmark incidents of insider trading. -
The Copper King: An Empire Built On Manipulation
Find out how Yasuo Hamanaka's actions in the copper market forever changed the rules for commodity traders. -
7 Controversial Investing Theories
We take a closer look at the theories that attempt to explain and influence the market. -
Breaking Down The Geometric Mean
Understanding portfolio performance, whether for a self-managed, discretionary portfolio or a non-discretionary portfolio, is vital to determining whether the portfolio strategy is working or ...
Free Annual Reports