Austrian Business Cycle Theory - the role of consumer durable goods

This paper focuses on empirical analysis of selected relationships derived from the Austrian Business Cycle Theory (ABCT). Special attention is paid to consumer durable goods. ABCT suggests that change in the rate of interest or credit availability induces change in relative consumption, production, and relative price of durable goods. This paper aims to verify whether the changes in these variables are consistent with Austrian theory. Several hypotheses are established and tested, using vector autoregression and Granger causality tests. The analysis is based on US time series data, covering the period between 1985 and 2013. The analysis failed to prove conclusively the validity of the hypotheses.