Austrian Business Cycle Theory on the CFA Exam

A friend informs me that the mainstream and prestigious CFA Institute now features Austrian economics in the study materials for the Level 1 CFA Exam. The section “Theories of the Business Cycle” includes several pages on Mises and Hayek (as well as Schumpeter), and they’re pretty good. “As a result of manipulating interest rates, the economy exhibits fluctuations that would not have happened otherwise. Therefore, Austrian economists advocate limited government intervention in the economy, lest the government cause a boom-and-bust cycle. The best thing to do in the recession phase is to allow the necessary market adjustment to take place as quickly as possible.” About 100,000 people take this exam each year, and now they are all being exposed to Austrian teaching.

A quick search of the CFA Institute website turns up several Austrian-friendly items, including a chapter from the 2011 book Boombustology that opens with a quote from Mises.


  1. Posted this at the SA forum by mistake:

    Unfortunately, they also say that businesses “overinvest” due to the low interest rates, and that the bust comes when they “suddenly stop investing, which depresses aggregate demand.” Nothing at all about malinvestment or capital structure. Still, baby steps, I guess….

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