He studied at the University of Vienna where he was in contact with other Austrian School economists such as Friedrich von Wieser and Ludwig von Mises and became close friends with other renowned economists in the decades to come: F.A. Hayek, Oskar Morgenstern, and Fritz Machlup. He later went to the United States where he held positions at Harvard University, where he worked with Joseph Schumpeter, and later as consultant and scholar in Washington D.C.
Haberler reformulated David Ricardo’s theory of comparative advantage in his work “The Theory of International Trade”, 1931, in an Austrian School view by using an opportunity cost view instead of the labour theory of value. In addition, he demonstrated that international trade increases economic efficiency and high living standards, and so he was a fervent defender of free trade.
Concerning business cycles, Haberler wrote “Money and Business Cycle”, 1932, which can be seen as an excellent exposition of the Austrian theory of the trade cycle. Other great contributions includes his critic to the Keynesian theory of the liquidity trap in his paper “Prosperity and Depression”, 1937. His argument would later be further developed by the economist Arthur Cecil Pigou into the economic term known as the Pigou effect.