The 'time to build' modeling approach of Kydland and Prescott helps resolve an empirical puzzle for the Austrian theory—why elevated investment persists even after a policy change becomes evident—because projects require continual investment to reach fruition rather than a single up-front outlay; Mike Montgomery has applied this technique to show the Austrian story fits better and addresses the objection that investment doesn't look as interest-sensitive as the theory requires.

factualpending

Speaker

Larry White

Evidence Quote

if you take account of the time to build propagation mechanism that it fits the story better

Source

Larry White on Hayek and Money 02/01/2010EconTalk
Created: 6/17/2026, 10:31:20 AM

My Notes

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