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