Business Cycle in Agriculture: The Austrian School Theory
Purpose: The study aimed to present the possibility of explaining fluctuations in agriculture using the theory of the business cycle of the Austrian School. The basis of this school's cycle theory is the theory of the structure of production (capital). It means that the production stages are arranged consistently with the technical and temporal process of producing and selling a consumer good. These stages in which capital goods are used are, to a different extent, distant from the final goods. Agriculture is a sector that is more distant from final goods than most of the other economic sectors. According to the Austrian School, the main reason for the cycle is the central bank's monetary expansion, leading to an increase in lending activities. Design/Methodology/Approach: In the analysis the causes and course of cyclical fluctua-tions in agriculture, the subject literature analysis, deduction, and verbal logic were pri-marily used. Findings: Credits go mainly to manufacturers producing in the early stages of the produc-tion structure. In consequence, it widens and lengthens. The result is a more dynamic than in other sectors growth in production, income, and prices, and thus also in agriculture. On the other hand, the narrowing and shortening of the production structure in the decline phase mean large drops in production, income, and agricultural prices. Practical Implications: The knowledge about dynamic changes in production and prices in agriculture enables farms to function better in the economy. While, in agricultural poli-cy, it allows for a better selection of instruments and the appropriate time of their applica-tion. Originality/Value: The research broadens the knowledge of the possibilities of using the theory of the business cycle of the Austrian School to explain the characteristics of the cy-cle in agriculture.