SEMAINE D'ETUDE SUR LE ROLE DE L ANALYSE ECONOMETRIQUE ETC.

0Q7

Fourthly, it is possible to show the orientation which is required
in the development policy of underdeveloped countries.

9) I have finished my own exposition, but there is just one
more point, I would like to discuss. This point is related to some
of the other papers presented here, namely HAAVELMO’s paper,
LEONTIEF’s and THEIL’s. These three papers accepting as a valid
hypothesis that if real capital is increased there is a proportionate
increase in real national income.
This means that they assume the relation

pe

as a production function, where R, C and y are respect
national income, real capital and the capital output ict.
relation is apparently derived from the practical const:=-capital
 output ratic

aval
Mis
he

but the deduction is in fact a very questionable one, empiricu!”
and theoretically.
First, as I said in the discussion on LEONTIEF’s and HAAVELMO’s
papers, from an empirical point of view this hypothesis is completely
 unacceptable.
The only data we have, at least to my knowledge, are the results
obtained by DouGLas and his followers. According to them, the
elasticity of real income with respect to real capital is of the order
of magnitude of 0.2 to 0.25. If we use these values in the
Haavermo, LeoNTIEF and THEIL models we will find very very
different results. In particular LEONTIEF’s results are not as optimistic
 as they appear in his paper

21 Allais - pag. 301