- MSU Denver
Department of Economics
School of Business
Campus Box 77, P.O. Box 173362
Denver, CO 80217
Nicolas Cachanosky
Metropolitan State University of Denver, Economics, Faculty Member
Research Interests:
I study the economies of Colombia (floating exchange rate) and Panama (dollarized) to illustrate how the monetary policy of a large economy can export capital structure distortions to small open economies that follow a different exchange... more
I study the economies of Colombia (floating exchange rate) and Panama (dollarized) to illustrate how the monetary policy of a large economy can export capital structure distortions to small open economies that follow a different exchange rate regime. If these distortions bear enough weight, then economies with different exchange rate regimes include a common factor that causes their business cycles to appear similar, despite the conventional prediction which focuses on exchange rate as a transmission mechanism or moderator of a monetary shock.
One of the most important objections to the Mises-Hayek business cycle theory is the rational expectations critique. The debate between supporters and critics of the Mises-Hayek theory has not paid sufficient attention to the problem of... more
One of the most important objections to the Mises-Hayek business cycle theory is the rational expectations critique. The debate between supporters and critics of the Mises-Hayek theory has not paid sufficient attention to the problem of differences in expectations and the market share in the allocation of production factors. I represent financially the effects that occur under the Austrian business cycle theory in the market of production factors as well as how economic imbalances occur when a central bank follows an expansionary policy and entrepreneurs have different expectations.
The 2008 crisis demonstrated that, absent inflationary pressures, significant economic stress can occur as a consequence of loose monetary policy. This scenario raises the question as to whether there is a better alternative to price... more
The 2008 crisis demonstrated that, absent inflationary pressures, significant economic stress can occur as a consequence of loose monetary policy. This scenario raises the question as to whether there is a better alternative to price stability as a guiding principle for monetary policy. In this paper, I explore the theoretical insights of the productivity norm, its superiority to price stability in the form of Hayek’s Rule and market monetarism’s NGDP Targeting as the focus of monetary policy, and the challenges of applying such principles by central banks.
Empirical studies of historical cases of free banking have received renewed interest recently. Because financial crises have occurred when central banks have existed, a comparative analysis with free banking promises to be worthwhile. By... more
Empirical studies of historical cases of free banking have received renewed interest recently. Because financial crises have occurred when central banks have existed, a comparative analysis with free banking promises to be worthwhile. By reference or implication, the Law of National Guaranteed Banks in Argentina between 1887 and 1890 has been advanced as a case of free banking.
Concerted expansion is a common concern in free banking. Huerta de Soto (1998 [2012], pp. 664–671) makes use of game theory to illustrate this problem. This approach, however, does not accurately describe the problem at hand: the game... more
Concerted expansion is a common concern in free banking. Huerta de Soto (1998 [2012], pp. 664–671) makes use of game theory to illustrate this problem. This approach, however, does not accurately describe the problem at hand: the game used provides an unsound description of concerted expansion in free banking. This commentary focuses on seven limitations to applying the prisoner’s dilemma game to model concerted expansion in free banking.
This paper extends the Mises-Hayek business cycle theory to open economies with fiat currencies. I explore: (1) the problem of domestic versus international monetary policy with fiat currencies in an international setting. (2) How the... more
This paper extends the Mises-Hayek business cycle theory to open economies with fiat currencies. I explore: (1) the problem of domestic versus international monetary policy with fiat currencies in an international setting. (2) How the feedback effects between central banks in the context of an expansionary monetary contributes to extend and transmit a Mises-Hayek business cycle from big economies to small financially integrated economies. I find that a lengthening of the period of production is not the only effect produced on the capital structure, but also a misallocation of capital goods between the production of tradable and non-tradable goods and services and that business cycles can become more severe when there are open economies with fiat currencies.
The interpretation that Mises preferred banking with a 100% reserve requirement finds strong support in Huerta de Soto’s Money, Bank Credit, and Economic Cycles. This article seeks to review his arguments concluding that it is in fact... more
The interpretation that Mises preferred banking with a 100% reserve requirement finds strong support in Huerta de Soto’s Money, Bank Credit, and Economic Cycles. This article seeks to review his arguments concluding that it is in fact more feasible to interpret that Mises preferred free banking with fractional reserves to the 100% reserve requirement.
Research Interests:
In Time Deposits, Dimension, and Fraud (2009), William Barnett and Walter Block argue that by borrowing short and lending long there is an over issuance of property rights. Their article, however, does not fully extend the consequences of... more
In Time Deposits, Dimension, and Fraud (2009), William Barnett and Walter Block argue that by borrowing short and lending long there is an over issuance of property rights. Their article, however, does not fully extend the consequences of their contribution. Once this is done, it becomes clearer that their argument suits a great impediment to banking, becoming a possible reason to support rather than to oppose fractional reserve banking. Bagus and Howden (J Bus Ethics 90(3):399–406, 2009) comment on Barnett and Block (J Bus Ethics 88(4):711–716, 2009), the authors claim that while maintaining the illegitimacy of fractional reserve deposits, borrowing short and lending long it is actually not illegitimate. An extension on Bagus and Howden (2009) will show that their line of argumentation can be applied as a defense of fractional reserve banking as well.
Research Interests:
To analyze the feasibility of applying the Coase Theorem, this article uses two traditional arguments, economic calculation and non-neutral effects, found in the Austrian literature. This article argues that the efficiency calculation a... more
To analyze the feasibility of applying the Coase Theorem, this article uses two traditional arguments, economic calculation and
non-neutral effects, found in the Austrian literature. This article argues that the efficiency calculation a judge undertakes is problematic and that his decision should not be considered neutral with respect to the general equilibrium (even with zero transaction costs). These problems imply serious challenges to the application of the Coase Theorem.
non-neutral effects, found in the Austrian literature. This article argues that the efficiency calculation a judge undertakes is problematic and that his decision should not be considered neutral with respect to the general equilibrium (even with zero transaction costs). These problems imply serious challenges to the application of the Coase Theorem.
Research Interests:
This article studies the main aspects of free banking to put forward the argument that such a system is endogenously stable and that financial crisis is an exogenous phenomenon. In support of this conclusion, it analyzes the cases of bank... more
This article studies the main aspects of free banking to put forward the argument that such a system is endogenously stable and that financial crisis is an exogenous phenomenon. In support of this conclusion, it analyzes the cases of bank runs, concerted expansion and how free banking would affect business cycles according to different schools of thought. The article concludes that money can efficiently be a market phenomenon outside the state.
Research Interests:
This article studies the difficulties of the argument that Hayekian spontaneous orders can be modeled using game theory and thus help integrate the Austrian School of economics with more mainstream economic schools of thought. I posit... more
This article studies the difficulties of the argument that Hayekian spontaneous orders can be modeled using game theory and thus help integrate the Austrian School of economics with more mainstream economic schools of thought. I posit that there are central aspects of Hayekian spontaneous orders that cannot be fully incorporated into game theory.
Research Interests:
"THE DISCUSSION OF WHAT IS and what is not inflation has become important among the Austrian economists in their debate regarding free banking with fractional reserves versus banking with 100-percent reserve. That such an old and... more
"THE DISCUSSION OF WHAT IS and what is not inflation has become important among the Austrian economists in their debate regarding free banking with fractional reserves versus banking with 100-percent reserve. That such an old and important discussion has not yet reached a consensus is interesting and suggests that there may be a problem or ambiguity around this concept.
Many Austrians also turn to the writings of Ludwig von Mises to find out what he himself considered to be inflation. The main intention is to find out if, in either system, free banking with fractional reserves or a 100-percent reserve, there could be cases of free market inflation. In particular, does any
change in the quantity of money (in the broad sense) imply inflation? Is it inflationary for the banking system to expand the quantity of fiduciary media even when there has been an increase in the demand to hold money in the broader sense?"
Many Austrians also turn to the writings of Ludwig von Mises to find out what he himself considered to be inflation. The main intention is to find out if, in either system, free banking with fractional reserves or a 100-percent reserve, there could be cases of free market inflation. In particular, does any
change in the quantity of money (in the broad sense) imply inflation? Is it inflationary for the banking system to expand the quantity of fiduciary media even when there has been an increase in the demand to hold money in the broader sense?"
Research Interests:
We study a case that applies hermeneutics to social sciences, in particular to the Austrian school of economics. We argue that an inaccurate treatment of hermeneutics contributed to an epistemological downgrade of the Austrian school in... more
We study a case that applies hermeneutics to social sciences, in particular to the Austrian school of economics. We argue that an inaccurate treatment of hermeneutics contributed to an epistemological downgrade of the Austrian school in the economic scientific community. We discuss how this shortcoming can be fixed and how a proper hermeneutic application to the Austrian school explains why this school of thought is neither positivist nor postmodern.