The international Cantillon effect

The political economy of fiscal dominance: Evidence from the Chilean government of Salvador Allende

“…However, Chile's case has shown that a reduction in the deficit will not always lead to a reduction in the inflation rate. It is also important to highlight that transitory changes in the inflation rate can have long-term effects, due to monetary policy lags that range between 12 and 24 months, that propagate and distort relative prices in the economy (Hagemann & Trautwein, 1998;Siero n, 2019). A drastic fall in the deficit (for example, because of fiscal responsibility rules) can reduce the inflation rate in a proportion that puts the economy on a stable path of economic growth and development.…”

Post-Pandemic Business Cycle in Poland and in the United States in the Light of the Austrian Business Cycle Theory

“…Throughout more than century that has passed since the first formulation of the business cycle theory the working of the banking sector and methods of financing of entrepreneurial projects has evolved. That is why newer studies about ABCT discussed such phenomena as real estate loans (Huerta de Soto 2006) or purchases of securities by the banking sector (Sieroń 2019) as possible causes of the business cycles.…”

“…Based on this criterion, i.e., the dominant credit expansion channel, Sieroń (2019) proposed a classification of business cycles, which is presented in the Table 1. According to this taxonomy, we argue that the post-pandemic cycle could be classified as the business cycle driven by the commodity market (through commercial and industrial loans).…”

“…The detailed explanation why these inflation paths diverged so strongly in these countries lies beyond the scope of this paper. It will be sufficient if we mention here the more restrictive monetary policy and rhetoric of the Fed compared to the National Bank of Poland.4 In the literature, one can also find the term "secondary features of the business cycles"(Sieroń, 2019).5 Perhaps, disinflation could be included as another possibility. However, it can be argued that disinflation will be still a stagflation from the counterfactual point of view (Huerta de Soto 2006).6 Both of us seem to be similarly convinced of this scenario for the U.S.…”

The central banking system paradox

“…Nor is it seen that fiscal policy could worsen this outcome through the crowding out effect (Boettke & Newman, 2017). The Cantillon effect explains that the extra-market-induced mismatch between production and consumption plans gradually deteriorates the economy in which newly created money is distributed in stages as agents receive and use it (Cochran & Call, 1998;Sieroń, 2020). The boom ends when the increase in the money supply exceeds the increase in the production of consumer goods, reducing the purchasing power of money and distorting the price system into an inflationary spiral.…”