ls - relative prices - are falsified by previous monetary disturbance" (O'Driscoll, 10). Hayek contributed to the business cycle by providing the overinvestment theory. A depression ensues when investment funds cease to be readily available and thereby leave incomplete investment projects that have already been constructed but require complementary projects, the construction of which has come to a halt (Spiegel, 543). In sum, any change takes time and needs adjustment costs. In particular, changes to the structure of production are inevitable in an investment boom. The rate of interest rises once the boom in underway and thus, a higher rate of interest tells against more about roundabout methods. To conclude, one may say that Hayek's contribution to the business cycle provides a basis for interpreting economy in the 19 and 20 century.BibliographyBlaug, Mark. Economic Theory in Retrospect. Cambridge: Cambridge University Press, 1978. 571-74.Butler, Eamonn. Hayek: His Contribution to the Political and Economic Thought of Our Time. USA: Universe Books, 1985. 8-10.Colonna, M., Hagemann, H., and Hamouda, O. Economics of F.A. Hayek. (Vol.2, pp xii- xiii). Edward Eglar Publishing Limited. England. 1994.Haney, Lewis H. History of Economic Thought. New York: The Macmillan Company, 1949. 667-84.O'Driscoll, Gerald P., Jr. Economics as a Coordination Problem: The Contributions of Friedrich A. Hayek. Kansas City: Sheed Andrews and Mcmeel, Inc. 1977. 9-11.Outhwaite, William and Tom Bottomore. The Blackwell Dictionary of Twentieth- Century Social Thought. Oxford: Blackwell Publishers, 1993. 55-57.Palgrave, Robert Harry Inglis. "Friedrich August von Hayek". The New Palgrave: A Dictionary of Economics. (Vol. 2, pp. 609-10). The Macmillan Press Limited. USA. C 1987.Palgrave, Robert Harry Inglis. "Ricardo-Hayek effect". The New Palgrave: A Dictionary of E...
