Munich Personal RePEc Archive

Fama's Efficient Market Hypothesis and Mises' Evenly Rotating Economy: Comparative Constructs

Howden, David (2009): Fama's Efficient Market Hypothesis and Mises' Evenly Rotating Economy: Comparative Constructs. Published in: The Quarterly Journal of Austrian Economics , Vol. 2, No. 12 (2009): pp. 17-26.

[img]
Preview
PDF
MPRA_paper_79586.pdf

Download (61kB) | Preview

Abstract

Mises created an artificial construct, the evenly rotating economy (ERE), from which to ascertain the source of entrepreneurial profit and loss. In particular, the ERE is characterized by two distinct elements. First is the elimination of the temporal element, second is the removal of changing market data. The second point necessarily arises from the first. Is it possible that the efficient market hypothesis (EMH), despite its practical flaws, may be used as a similar theoretical construct? If we envision a similar state of affairs as under the ERE, is it possible to grasp more fully the effect that information has on prices? We argue that it cannot, for two main reasons.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.