Hayek's Contribution to the Business Cycle Friedirch August von Hayek was born in Vienna on May 8, 1899 and died on March 23, 1992, in the city of Freiburg im Breisgan in Germany. Hayek was a central figure in 20th century economics and represented the Austrian tradition. After serving in the military, Hayek became a student at the University of Vienna where he received his doctorate in law and political science. In 1923-4 Hayek visited New York and then returned to Vienna where he continued his work. Hayek became the first director of the Austrian Institute for Business Cycle Research in 1927. He also gave some lectures in England at the London School of Economics in 1931. In England, he participated in debates such as monetary, capital and business cycle theories . during the 1930s. Hayeks' contributions were very important. To describe business cycles, it is necessary to examine the historical record of a nation's overall economic performance. "It is a long-term growth pattern characterized by alternations of expansion and contradiction. These alternations recurring above and below the long-term trend are economic cycles" (Outhwaite, 55). The term "economic fluctuations" is used to describe the same phenomena. Economists have identified many causes of the business cycle. There are some factors external to the economic system and others internal to it. External causes such as wars and great inventions refer to exogenous factors. While “endogenous factors belong to the internal workings of the economy itself and its tendency to fluctuate over prolonged periods” (Outhwaite, 56). Before the Second World War, the emphasis was on endogenous factors, and therefore on theories such as monetary theory; excessive investments; underconsumption; psychological were more important than others. In general, all cycle theories involve some type of cost mismatch. FA Hayek was one of many economists who, in effect, explained the theory of overinvestment in a monetary sense. The theory of overinvestment is related to theories of the overproduction type. Such theories include consumer goods, capital goods, or investments of money or credit. “They may stress fixed capital against working or liquid capital” (Haney, 667). However, the theory of overinvestment assigned a crucial role to the principle of acceleration, according to which "a simple decline in the rate of growth of corporate sales could give... middle of paper... Butler, Eamonn. Hayek: his contribution to the political and economic thought of our time. USA: Universe Books, 1985. Colonna, M., Hagemann, H. and Hamouda, O. Economics of F.A. Hayek (Vol.2, pp xii-xiii). Eglar Publishing Limited. England Problem of Coordination: The Contributions of Friedrich A. Hayek. Kansas City: Sheed Andrews and Mcmeel, Inc. 1977. 9-11. Blackwell Publishers, 1993. 55-57.Palgrave, Robert Harry Inglis. “Friedrich August von Hayek.” USA C 1987.Palgrave, Robert Harry Inglis. “The New Palgrave: A Dictionary of Economics.” . 4, pp. 198-99). New Jersey: Prentice-Hall, Inc., 1971. 543-44. Tomlinson, Jim. Hayek and the market. London: Pluto Press. 1990. 5-6.