The Fundamentals of an Austrian Macroeconomics: The Market for Time and the Market for Money

Roger Garrison has argued that time and money are the ‘universals of macroeconomic theorizing’. In that paper, he defines the Austrian approach to macroeconomics by its willingness to take both time and money seriously. His critique of mainstream macroeconomics is that the various schools of thought (Keynesianism, monetarism, New Classicism, and, by extension, New Keynesianism) treat time and money far too superficially in comparison to the central roles that they play in real-world economies. Garrison summarizes this point: ‘Time is the medium of action; money is the medium of exchange…And it is precisely the “intersection” of the “market for time” and the “market for money” that constitutes macroeconomics’ unique subject matter.’ The problem with mainstream macroeconomics is that its notions of time and money are so abstract and unrealistic as to prevent serious consideration of how the markets for each actually behave.

--Steven Horwitz, introduction to Microfoundations and Macroeconomics: An Austrian Perspective, Foundations of the Market Economy (London: Routledge, 2003), 3.