Colin, the Austrian theory of the trade cycle, as I understand it, is
not about business cycles but about a single boom-bust cycle. Second,
the basic theory is not about the manipulation of interest rates but
about an unexpected change in the quantity of money that enters via
the markets for business loans. Third, imperfection of government
policy is not a part of the theory. Fourth, it is not necessarily due
to a central bank's action or to government at all. It is sufficiently
general to apply to a gold strike under a gold standard regime or to
credit expansion in a free enterprise in banking regime.

There is, in my opinion, not a scholarly consensus appraisal, if by
that you mean some survey article on which the bulk of economists
agree. Even within the class of people who call themselves Austrian
economists, there appears to be a division on most issues, except for
the acceptance of a classical, free market ideology.

The inventor of the theory was Ludwig von Mises (1912).

Mises, Ludwig von. (1935) The Theory of Money and Credit. New York:
Harcourt Brace. (Originally published in German in 1912).

http://www.econlib.org/library/Mises/msT.html


Mises lamented, however, that World War I prevented him from providing
 what he regarded as the epistemological underpinnings of the theory
(1978). After World War II, he published a treatise (1966 [1949]) that
provided those underpinnings. But the treatise has remained a rather
obscure work largely because of its use of terminology that was
unfamiliar to the profession, which had developed along different
lines than he had hoped it would, and because of its broad scope.

Mises, Ludwig von. (1978) Notes and Recollections. South Holland, IL:
Libertarian Press.

Mises, Ludwig von. (1966) Human Action: A Treatise on Economics.
Chicago: Henry Regnery Company. Online at
http://www.econlib.org/library/Mises/HmA/msHmACover.html


So the best recommendation I can give is to read Mises with the mind
of an early 20th century neoclassical economist like J.B. Clark or
Phillip Wicksteed (which probably means reading their classic works on
the marginal productivity theory of distribution first). The cycle
theory proper is presented in his Chapter 20, but given the form of
its presentation, a proper understanding requires an understanding of
a large part of the rest of the almost 900-page treatise.


Or, if you wish to learn some less rigorous versions of the theory, try

Garrison, Roger (ed). (1996) The Austrian Theory of the Trade Cycle
and Other Essays.
http://mises.org/tradcycl.asp

Hayek, F. A. (1933) The Monetary Theory of the Trade Cycle. London: J. Cape.
http://www.econlib.org/library/Mises/msT.html


A reader friendly, mundane version lacking epistemological
underpinnings and, indeed, more in the tradition of the economics that
developed in a different direction is Chapter One of Murray Rothbard's
America's Great Depression

http://mises.org/rothbard/agd.pdf


Then there is this mess:

http://en.wikipedia.org/wiki/Austrian_business_cycle_theory


Pat Gunning
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