"The Cluster of Errors" - The Austrian Theory of Boom and Bust

Does the financial crises of 2008 fit the Austrian economic theory of "boom and bust"? American economics professor Lawrence H. White discusses economists' rationale for following interest rates and the reliability of turning to theory to explain economic events.

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CCSS: Adaptable
Instructional Ideas

  • This is an excellent video to prompt discussion and debate on the applicability and relevance of the Austrian "boom and bust" theory
Classroom Considerations

  • As the final segment of a three-part series on the Austrian theory of the business cycle, pupils should be prepared with a thorough background knowledge of the theory, as well as the major events that led to and encompassed the 2008 financial crises
Pros

  • Clearly connects economic theory to modern, relevant events
  • Insightful discussion and engaging video
Cons

  • None