Geldtheorie Und Konjunkturtheorie. [Monetary Theory and the Trade Cycle].

The present volume, Hayek's first book, was first in his series 'Contributions to Trade Cycle Research' published by the Austrian Institute for Trade Cycle Research, founded by von Mises and directed by Hayek from 1927 to 1931. Hayek's contributions to monetary theory and trade theory are closely linked. Here, he integrates the idea of money as a medium of exchange with the idea of the price system as a communication network. His trade-cycle theory consists of integrating monetary theory and capital theory in which a particular aspect of the price system, namely the system of international prices is emphasized. The Austrian theory of the trade cycle was first formulated by von Mises who showed that money-induced movements in the interest rate have identifiable effects on the capital structure. Hayek's improvements were based on an extremely stylized portrayal of the economy's time-consuming production process (New Palgrave, vol. 2 609-613). Hayek's analysis is powerful, and represents an alternative explanation of economic disequilibrium to that of Keynes.