The Review of Austrian Economics, 16:2/3, 205–229, 2003.
2003 Kluwer Academic Publishers. Manufactured in The Netherlands.
What are the Perspectives for an Applied Austrian Economy?
Production Period and Cycles: Several
Interpretations in a Neo-Austrian Economic
E AUGIER email@example.com
LAURENT AUGIER firstname.lastname@example.org
e de La Rochelle, D
epartement de Math
ematiques, av. M. Crepeau, 17 000 La Rochelle, France
Abstract. The aim of this contribution is to study the notion of the period of production by taking into consideration
the time-consuming nature of capital. Long delays between investment expenditures and receipts of proﬁts from
capital are indeed a remarkable property of the Austrian theory of capital. The study of the great essays of the
neo-Austrian capital theory modeling allows us to postulate that there are at least two large contributing groups
depending upon whether the production period is endogenous or exogenous. Our work consists in showing the
well-founded methodology of the ﬁrst current by suggesting a neo-Austrian inerpretation of the non-steady state
behavior of the standard macroeconomic model. We show that the origin of economic cycles is the potential
conﬂict between the producer’s plan of investment through the period of production and the inter-temporal choices
of the consumers.
Key Words: period of production, cycles, economic growth
JEL classiﬁcation: D9, C0, N0.
Since the nineteen-sixties there have been various attempts to revive and unify the Austrian
capital theory into a general economic model. However classifying these various contribu-
tions seems quite difﬁcult, each author being motivated by only one or few concepts of the
Austrian capital theory.
The reason for this is that the Austrian theory is quite rich. For instance, while some
authors concentrated on the concept of superiority of roundabout methods, others studied
the concept of impatience. Whatever the model and the methodological approach chosen,
synthesizing the Austrian capital theory into a unique model is a painstaking task.
Then there appears a second difﬁculty about the methodological question of the use of
mathematics in the Austrian theory. It is common to consider the refusal to mathematically
formalize the economic theory stands out as a speciﬁc feature of the Austrian School.
However widespread this point of view is not general, for example, Bh¨om-Bawerk writes
in his “Positive Theory of Capital” that “an economist-mathematician could quite simply
enclose all things appertaining to the question within one simple mathematical formula”
(1929:338). The author restricts himself to one or two simple numerical examples, but the