Abstract

abstract Cowen and I agree that rational‐expectations theory is unrealistic and that risk is difficult to quantify. However, we continue to disagree about the riskiness of consumption as opposed to investment. Since more investment might lead to a recession if investment is relatively risky, Cowen's use of rational‐expectations theory to buttress the Austrian school's claim that market economies can shift toward relatively more investment without experiencing macroeconomic disruption remains suspect.