Sraffa on Hayek: unexpected influences

This paper investigates whether, contrary to Hayek’s assertion, Sraffa’s comments had enduring effects on the evolution of Hayek’s thought in the 1930s and early 1940s. The paper argues that Hayek’s viewpoint that monetary shocks are a necessary conditions for business cycles to occur, his main thesis in Prices and Production, is no longer held in The Pure Theory of Capital, though he still maintains, on different grounds, that monetary shocks are the most relevant sufficient condition for business cycles. This change of view is shown to depend of Sraffa’s critique.