Re: multiplier-accelerator issue

["eperez" <eperez@xxxxxxxxx>]

Kahn's accounts of the multiplier are found in
his Raffaele Mattioli lectures and (pp.91-104) and in
a letter to Patinkin reproduced as Appendix II of
"Keynes Cambridge and the General Theory".

(i) In The RM lectures he writes that he began to work on the multiplier
article in August 1930 (inspired by Can Lloyd George Do it?). In July
1930 he met Colin Clark. "I was not a statistician and it was in in co-
operation with Colin Calrk taht I produced, for the use of the Comittee
of Economists, a paper which might be regarded as a primitive draft of part
of my article. Colin Clark not only provided the statistical basis. He helped
me in the drafting. I cannot recall any doubt on his part of an infinite
convergent series is finite".
"Nobody can suppose that there is anything new in the multplier" (p.101).
His article 1931: "The Relation of Home Investment to Unemployment" was
published in the Economic Journal.

(ii) He writes in his RM lectures and his letter to Patinkin that it was ina
latter article ("The financing of Public Works" 1932) were he "expressed the
identity between Savings and Investment". "Of course what we had done -
but failed completely to realise- was, by a very roundabout method, to
establish the identity between savings and investment" (RM, p.99).

(iii) In his letter to Patinkin he writes: "I regard the main importance of my
1931 article as" (i) Disposing of the Trasury view and (ii) "finally disposing
of the idea that the price level is determined by the" QT....Later statistical
work by Dunlop and Tarshis threw doubt on this assumption (that the
supply curve of consumption goods was in the short period upward
slopping) and seemed to indicate perfect eñlastic supply under conditions of
heavy unemployment. In his comment to Dunlop and Tarshis, Keynes
(1929) poimted out that this assumption gave a fortiori to his arguments".

(iv) Keynes claims in the GT that Kahn introduced the multiplier in
economic theory. Kahn (1984) cites Patinkin suggesting that Keynes thought
of Nicholas Johannsen (mentioned in the Treatise) as a possible precursor of
the multiplier.


From:           	"J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>
To:             	"Daniele Besomi" <dbesomi@xxxxxxxxxxxxx>,
       	"Post Keynesian Thought" <pkt@xxxxxxxxxxxxxxxx>,
       	"History of Economics Society" <hes@xxxxxx>
Subject:        	multiplier-accelerator issue
Date sent:      	Thu, 24 May 2001 17:57:37 -0400
Send reply to:  	pkt@xxxxxxxxxxxxxxxx

      I have just taken a look at some, but not all,
of the papers associated with the origins of the
multiplier-accelerator model (I do not have all of
them available at the moment, although I have
read most of them before).
     1)  The argument that Giblin invented the multiplier
looks to me to be a hard one to make, based on
reading his lecture.  It certainly is not the multiplier
as it is usually formulated, although there are hints
of it there, surely.  In any case, Giblin does not have
an accelerator model in his lecture that I could spot,
so he is not in the running on having developed the
multiplier-accelerator model.
     2)  Although one reads frequently that R.F. Kahn
"discovered" or "invented" the multiplier (according
to Keynes, anyway), I do not know where he published
that result, if he even did.
     3)  Although he did not work out a mathematical model,
J.M. Clark not only had the idea of the accelerator, but
understood that it was associated with a multiplier effect
as well prior to both Kalecki and Harrod.  The source
is J.M. Clark, "Capital Production and Consumer-taking:
A Further Word," Journal of Political Economy, Oct. 1932,
pp. 692-93.  In particular, although he sees an initiation
of a change in investment from a decrease in consumer
demand, he then notes that the decrease in investment,
"in turn reduces purchasing power, unless offset by opposite
movements elsewhere, and results in a positive decrease
in consumers' demand."
     If that is not the multiplier effect interacting with the
accelerator effect, I do not know what is.
     4)  The Kalecki model has certain mathematical problems.
It is a sort of multiplier-accelerator model, but not a full blown
one.
     5)  In his original paper in REStat in 1939, Samuelson
only mentions Alvin Hansen (who wrote in 1938) as an
influence on him.  He reiterates this in a piece in 1959
in REStat.  However, he discusses Harrod's role in his
less well known paper from later in that year, "A Synthesis
of the Principle of Acceleration and the Multiplier," Journal
of Political Economy, 1939, Dec. 1939, pp. 786-797.  He
provides the quote from Clark in there that I just noted.  He
gives a lot of credit to Harrod (and does not mention Kalecki),
but also declares that "Upon rigorous analysis his exposition
will be found to abound with non sequiturs and
oversimplifications. On the whole Harrod's intuition surpasses
his reasoned conclusions."
     In short, Harrod clearly played a very important role.  But,
he would appear to be neither the inventor of the idea of
combining a multiplier with an accelerator, credit for which
should probably go to J.M. Clark, nor of producing a fully
consistent and rigorous model that does so.
Barkley Rosser
James Madison University
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