Das Finanzsystem des deutschen Reiches in politischer und wirtschaftlicher Beziehung

Study week on the econometric approach to development planning

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Monograph

Identifikator:: 845394444

URN:: urn:nbn:de:zbw-retromon-47716

Document type:: Monograph

Author:: Grotewold, Christian http://d-nb.info/gnd/133549372

Title:: Das Finanzsystem des deutschen Reiches in politischer und wirtschaftlicher Beziehung

Place of publication:: Leipzig

Publisher:: Poeschel

Year of publication:: 1906

Scope:: 1 Online-Ressource (VII, 150 S)

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Einleitung

Collection:: Economics Books

524 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 2R First point. If in equation 2.4 œ is equal to I, the rate of growth is 0. In this case, whether there is public investment or private investment, the rate is exactly the same. This is quite disturbing because if public investment is more efficient, one would expect that this conclusion would be independent of œ. The logic of the model cannot be attacked in any way; it is absolutely correct. But it is necessary to stress the hypothesis from which the conclusions are derived. Thus, my first point is: if ¢ is equal to 1, public invest- ment has no role at all in increasing the rate of growth. My second point is: HAAVELMO has said that the hypothesis that real income is proportional to capital does not play any role in the final results. But if it were assumed that real income cannot in- crease indefinitely as a result of increasing investment, the conclu- sions of the model would be absolutely different. And, on the contrary, if it were assumed that real income is increasing proportionally to real capital, we would be admitting an hypothesis which is in contradiction with the facts. If one assumes an indefinite increase of real national income resulting from indefinitely accumulating capital, this is equivalent that the stage of decreasing returns to capital is never reached. And this is not confirmed by observation. Thirdly, the hypothesis of a cycle of oscillation for K, is essen- tial for the conclusions, HAAVELMO is completely right in saying hat fluctuations of K, have been observed in the past, and I am ready to admit equation (4.1) at least as a first approximation. But as far as public investment is concerned it has never been observed to be able to compensate for the fluctuations of private investment. In addition, we have never observed an absence of fluctuations in public investment. Thus, I could propose another model conform- ing with information relating to the past and show that public investment has exactly the same drawbacks as private investment for the rate of growth. At all times, we must be very careful about the use politicians could make of such a model. They might believe that a general demonstration had been . given of the superiority of public invest- [81 Haavelmo - pag. 22

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