tag:blogger.com,1999:blog-1240730580083032584.post6097929988996639595..comments2024-02-26T22:53:09.562-08:00Comments on Money, Markets, and Misperceptions: Not Always on the PPF – Problems with the Hayekian TriangleUnknownnoreply@blogger.comBlogger7125tag:blogger.com,1999:blog-1240730580083032584.post-8091396297048385592014-09-02T10:40:12.770-07:002014-09-02T10:40:12.770-07:00sure, but the hayekian triangle doesn't preten...sure, but the hayekian triangle doesn't pretend that it is not aggregating, it is just a pedagogical tool for understanding size and temporal distribution of resources in a given line of production, basically.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1240730580083032584.post-9074716500438082952014-02-22T22:26:46.507-08:002014-02-22T22:26:46.507-08:00Good, clear post. I has inspired me to post as wel...Good, clear post. I has inspired me to <a href="http://lorenzo-thinkingoutaloud.blogspot.com.au/2014/02/not-heterogeneous-enough.html" rel="nofollow">post as well</a>, taking the contrarian view that the problem with the Hayekian triangle as microeconomic explanation is that it does not take the heterogeneity of capital sufficiently seriously.Lorenzohttps://www.blogger.com/profile/00305933404442191098noreply@blogger.comtag:blogger.com,1999:blog-1240730580083032584.post-52609156286079059782014-02-22T08:09:09.547-08:002014-02-22T08:09:09.547-08:00I just noticed that I used the word later when I s...I just noticed that I used the word later when I should have said earlier after the Hawtrey quote. That should clear up some confusion. The expansion in the latter stages can occur alongside, rather than as a result, of expansion of earlier stages.James Catonhttps://www.blogger.com/profile/14807595180565488334noreply@blogger.comtag:blogger.com,1999:blog-1240730580083032584.post-14817152731479153632014-02-22T07:50:17.213-08:002014-02-22T07:50:17.213-08:00Yes, the theory says that we should see a short-ru...Yes, the theory says that we should see a short-run expansion of the entire triangle if growth is due to artificial credit expansion. Garrison conveys this well by moving the economy of the PPF in his model. <br /><br />If expansion is due to savings, the model says we should see resources shift to the earlier stages and over time, the latter stages will expand sustainably.<br /><br />I'm puzzled by the second sentence of your second comment:<br /><br />"If we're faithful to the ideal type, initial investment will occur in later stages, not earlier stages."<br /><br />But you go on to say that the expansion in the latter stages occur as a result of an increase in the profit margins of earlier stages. I don't believe we are in disagreement. <br />James Catonhttps://www.blogger.com/profile/14807595180565488334noreply@blogger.comtag:blogger.com,1999:blog-1240730580083032584.post-49689673917243499132014-02-21T16:34:33.075-08:002014-02-21T16:34:33.075-08:00"the introduction of the stages into the expo..."the introduction of the stages into the exposition of the extension of investment serves no useful purpose."<br /><br />"In terms of macroeconomic analysis, we are left with a triangle whose usefulness is exceeded by its obscurantism."<br /><br />A baseball bat is not a particularly good tool for opening a can of beans. To this extent, the triangle as a descriptive and analytical tool also has its limitations. However, baseball bats are particularly good for clubbing people over the head; the triangle is similarly percussively effective at demonstrating the heterogeneity of capital investment. It matters where investment is going. Combined with the knowledge problem confronted more effectively by decentralized rather than centralized planning, you have established a presumption against government-directed investment.<br /><br />Bloody useful, I'd say.Coach Austinhttps://www.blogger.com/profile/01044906597484819572noreply@blogger.comtag:blogger.com,1999:blog-1240730580083032584.post-90198288982892977332014-02-21T16:27:15.629-08:002014-02-21T16:27:15.629-08:00Also, re: Hawtrey, I'd have to read his whole ...Also, re: Hawtrey, I'd have to read his whole critique, but that excerpt doesn't satisfy me. If we're faithful to the ideal type, initial investment will occur in later stages, not earlier stages. This increases profit margins for earlier stages, because a price rise in the 2nd stage will attract investment into the 3rd stage (to produce the inputs the 2nd stage demand). So, in reality, we should see an increase in investment throughout the entire structure of production, not just earlier stages -- and, in terms of volume, most of the new investment will be in the middle and later stages, not in the earliest stages.Jonathan Finegold Catalánhttps://www.blogger.com/profile/16710256011291680376noreply@blogger.comtag:blogger.com,1999:blog-1240730580083032584.post-60911442857493629702014-02-21T16:23:09.420-08:002014-02-21T16:23:09.420-08:00I haven't been able to read the whole post, so...I haven't been able to read the whole post, so maybe I'm jumping the gun, but that consumers' goods prices and producers' good prices (on aggregate, wrt the latter) go up together is not the same thing as comovement of prices between stages of production. And, I'm not sure it qualifies as a shortcoming of the theory, either, since both Mises and Hayek were aware of the empirical fact and actually argued that it helped their case rather than undermine it (since, productive expansion "backed" by real savings implies falling consumers' good prices).Jonathan Finegold Catalánhttps://www.blogger.com/profile/16710256011291680376noreply@blogger.com