EXPLAINING MALINVESTMENT AND OVERINVESTMENT.

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    • Abstract:
      The article provides an explanation of malinvestment and overinvestment in the context of Austrian business cycle theory (ABCT). The authors explain that unsustainable economic expansions are a result of central bank initiatives. A detailed overview of the subsistence fund, savings and productive expenditure along with the diagrammatic terms illustrating the components of ABCT is presented. The article also stresses that the subsistence fund had been depicted as an implicit part of ABCT.