Business Cycles and Skyscrapers
Record-breaking skyscrapers have a habit of opening just as the economy turns—a pattern Mark Thornton connected to Austrian business cycle theory in his work on the skyscraper curse. Lucas Engelhardt, Thornton's coauthor on the 2015 response to the curse's critics, explains the mechanism: artificially low interest rates raise land prices, and bid-rent theory shows why the effect concentrates downtown, precisely where towers get built. Add larger firms and cheap research and development to solve the engineering, and the record tower and the cyclical peak arrive together. He then works through…
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