Study week on the econometric approach to development planning

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Monograph

Identifikator:: 1824422792

URN:: urn:nbn:de:zbw-retromon-217476

Document type:: Monograph

Title:: Study week on the econometric approach to development planning

Place of publication:: Amsterdam [u.a.]

Publisher:: North-Holland Publ. Co. [u.a.]

Year of publication:: 1965

Scope:: XLVII, 1259 S.; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Some observations on countercyclical fiscal policy and its effects on economic growth / Trygve Haavelmo, Universitetet i Oslo - Oslo - Norge

Collection:: Economics Books

520 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 2e First, theoretically, the conclusion concerning the influence of the public investment on the rate of growth depends largely on a very strong hypothesis which I personally cannot accept (assumption 1). Secondly, empirically, there is no correlation showing that the rate of growth is doubled when all investment is publicly directed. Third, for full employment, what is important is not investment but spend- ing, and spending depends essentially on monetary policy. Finally, the fourth hypothesis (4.1) is a very questionable one to the extent that it assumes that public investment does not fluctuate at all. FISHER I have a question concerning the conclusion of part three of the paper. I am concerned particularly about the place in which it is found that the fiscal policy for full employment has some peculiar properties, In particular, HAAVELMO shows that such policies lower the rate of private investment and for that matter the rate of public investment. The more that is spent on current consumption and the more that is being earned evidently the more it is felt that the future will take care of itself. HAAvVEUMO states that it seems dif- ficult to imagine that people would actually have a welfare function in which a policy with these properties would be an optimal choice. However, this overlooks a crucial point which is expressed in the equations in the paper. This is that capital stock does in fact ap- pear with a positive coefficient. It is thus true that while with a given capital stock people would invest less under full employment, this would have the result of lowering the capital stock below what it would have been otherwise and therefore such reduction of investment could not continue to happen for a long pe- riod of time. It follows that if people had a welfare function which extends over a reasonably long period, they might well find that an optimum choice would be fiscal policy for full employment be- cause they would not then find it to be true that the less progress they were making, the more they were spending. Professor Haa- '8] Haavelmo - pag. 18

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