Re: multiplier-accelerator issue

[Sven R Larson <larson@xxxxxx>]

Just briefly - I think I didn't see these references on the accelerator:

Sidney Alexander: The accelerator as a generator of steady growth, QJE
May '49;
Hy Minsky: Monetary systems and accelerator models, AER Dec '57.

They're both good bases for model building.

/srl

eperez wrote:
>
> 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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--
Sven R Larson
PhD; Assistant professor of economics
Department of Social Sciences, Bldg. 22.2
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