Hayek's Contribution to the Development of Capital Theory: Hayekian Triangles

F. A. Hayek’s contribution to the development of capital theory is commonly regarded as his most fundamental and path-breaking achievement. His early attention to “Intertemporal Price Equilibrium and Movements in the Value of Money” provided both the basis and inspiration for many subsequent contributions. The widely recognized but rarely understood Hayekian triangle, introduced in his 1931 lectures at the University of London, were subsequently published as Prices and Production. The triangle, described in the second lecture, is a heuristic device that gives analytical legs to a theory of business cycles first offered by Ludwig von Mises. Triangles of different shapes provide a convenient but highly stylized way of describing changes in the intertemporal pattern of the economy’s capital structure.

--Roger W. Garrison, Time and Money: The Macroeconomics of Capital Structure, Foundations of the Market Economy (London: Routledge, 2002), 10.