SEMAINE D ETUDE SUR LE ROLE DE L’ANALYSE ECONOME1RIQUE ETC.
Ia
cond case get much greater consumption and rate of growth of
capital in the future. Therefore it is doubtful whether one can say
that one alternative leads to more consumption and the other leads
to more investment generally. This may shift over time. That
brings me to the question of the underlying preference function in
general. I have not made a statement of right or wrong here. I have
just said that if one wants growth, here’s how matters work. I'm
not saying that it is impossible that one should want precisely the
development that we get by the model under the assumption of
nvestment being mainly private. There is one point in that con-
nection however; as far as I see it, the only way that a social pre-
ference function — if we assume such a thing — shows up in this
kind of economic model, is through the consumption function. And
‘here is nothing there that should lead us to think that people have
strange cyclical variations in their preferences. In fact, people may
not even be aware of the investment cycle in my model. They have
constantly full employment. Their disposable income, it is true, is
higher when the economy is not growing than when it grows. But
consumers, counting in money, don’t see that the country is not
growing and therefore they are consuming. I think that this is a
‘air interpretation of the meaning of the consumption function. If
people have high income, they will naturally think that they can
afford to consume more and still provide for the future while
actually they are only piling up money which the government owes
‘hem. I think now that, even though I have not mentioned the
names of all those who commented. I have answered more or less
111 the questions
AILAIS
This conclusion that the rate of growth is increased if you have
public investment instead of private investment is so important from
the point of view of both economic theory and pclic- “hat " hink
I must insist again on three other points
Haavelmo - pag. 21
