Testing Austrian Business Cycle Theory? A Rejoinder to Andrew T. Young (original) (raw)

Young (2005) attempts to test Austrian Business Cycle Theory (ABCT). The present paper is devoted to an examination of this test. Our conclusion is that Young’s paper fails on several grounds. In the first place, Young’s model fails on its own terms. In particular, we come up with significantly different parameter estimates using the same data. Beyond these serious objections, there is the more fundamental difficulty that Young’s approach, even if conducted flawlessly, would still be an improper “test” of ABCT.