Wicksell, Knut (1851–1926)

Knut Wicksell was a Swedish economist. In any ranking of economists who were active in the 100 years following Wicksell's birth, his name would surely appear in the top 10. Wicksell's work included substantial contributions both to the Austrian theory of the business cycle and the theory of public choice. Wicksell followed Eugen von Böhm-Bawerk in treating production as a sequence of stages, where the production of consumer goods was supported by a hierarchical structure of capital goods. To this structure of production, Wicksell attached the idea of two distinct rates of interest: a natural rate and a loan rate. A divergence between the natural rate and the loan rate would induce a change in the structure of production. For instance, a fall in the ...