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Arrow, K. J. and D. Starrett, “Cost-theoretical and Demand-theoretical Approaches to the Theory of Price Deter-mination,” In: J. R. Hicks and W. Weber, Eds., Carl. Menger and Austrian School of Economics, Clarendon Press, Oxford, 1973.

has been cited by the following article:

• TITLE: Flaws of Modern Economic Theory: The Origins of the Contemporary Financial-Economic Crisis

  AUTHORS: Ezra Davar

  KEYWORDS: Flaws of Modern Economic Theory, Keynes’s Multiplier, Modern General Equilibrium Theory, Modern Money Theory, Smith, Walras, Keynes

  JOURNAL NAME: Modern Economy, Vol.2 No.1, February 24, 2011

  ABSTRACT: The Paper shows how fundamental flaws in the modern economic theory are a central part in the formation of financial bubbles: 1) The Keynesian multiplayer is based on the substitution of the cause (the national in-come) for the effect (investment); which yields inadequate results. 2) Modern general equilibrium theory is based on the following assumptions: a) modern version of free goods conception; b) “Walras’ Law”; This is realistically absurd, as according to these assumptions, the equilibrium price of some goods and services might be equal zero. 3) Modern money theory assumes that fiat money is the only type of money, which is erroneous.