Austrian approach does not view economics as science, rather as a deductive study.
Well, yes. It's a religion, or more appropriately a cult. It has a set of pre-determined conclusions and finds excuses for them. E.g.: "Economy is doing great - a good time to cut taxes on the rich and reduce social safety network!", "Economy is sputtering - need to reduce taxes on the rich and kick poor people more, so they work harder!", "Economy is crashing - that's because taxes were not reduced enough, cancel taxes on the rich and force all those lazy poor to work for slave wages!".
So answer this simple question: when is it a good time to raise taxes and improve social safety net?
You probably wanted to say "recessions happen because customers do not have money". Deflations (in the sense of falling price levels) occur in other situations too (for example increases in productivity that outpace the increase in the money supply) and don't necessarily have the effects associated with recession.
No. I was precise in my description. Deflation happens ONLY when consumers have no free money to spend. I've actually studied ALL the documented episodes of deflation in the last 120 years in all of the countries. Out of 60 cases there was only ONE exception (Sweden, 1992) where a nominal deflation coincided with economic recovery, and that's only because deflationary processes had been arrested by a quick and decisive stimulus actions, helped by increased export revenue.
Deflation does not always lead to Depression-scale slowdowns, but it's never associated with good times.
1. There are situations where a falling price level does not cause a recession (say in the consumer electronics sector, or the examples from the Atkeson/Kehoe paper I linked)?
There are no such situations.
Regardless of whether a mission expands or contracts, administrative overhead continues to grow at a steady rate.