The Price Structure in the Polish Business Cycle. The Downward Phase

The purpose of this paper is to verify hypothesis derived from the theory of the Austrian School of Economics. It says that in the downward phase of the business cycle, the prices of goods produced in sectors which are remote in relation to consumers fall comparing to the prices of the consumption goods.
Conducted research of price variations in the Polish economy provided no grounds for positive, unambiguous verification of this hypothesis. The list of observations confirming the hypothesis involves: (1) a relative decline in investment outlays’ prices comparing to the prices of consumption goods in the downward phase of the cycles in 2000–2002 and 2004–2005, (2) the lowest annual average increases of investment outlays’ prices, (3) the largest decreases in metal prices in all downward stages, (4) dynamic decrease in prices of many raw materials in years 2008–2009. The following variations, however, are contrary to the hypothesis: (1) contrary to the thesis of the Austrians, structure of the dynamics of prices of capital goods, industrial production and consumer goods in the last downward phase, (2) the most dynamic growth in prices of raw materials, (3) the relative increase in prices of machinery and equipment in relation to food prices in the first two downward phases.