SEMAINE D'ÉTUDE SUR LE ROLE DE L ANALYSE ECONOMETRIQUE ETC. 
521 
VELMO’s conclusion overlooks the role of capital stock in the model 
ind therefore overlooks the presence of long-run effects 
ALLAIS 
May I add a remark? The conclusion that the rate of growth 
s greater if we have public investment in the model, is evident 
without any calculation since Professor HAAVELMO introduces two 
strong hypotheses. The first, as I have already stressed, is that 
real national income is proportional to real capital. The second one 
s the acceptance of an oscillation in K, (formula 4.1), at the same 
ime making the assumption that public investment is increasing 
when this oscillation is present. With such an hypothesis, it is 
vident without any calculation that in the end there must be a 
greater rate of growth when the volume of public investment is 
significant. 
HAAVELMO 
First, some general remarks. Let me be quite emphatic about 
my ideas on public investment in this connection. There is no kind 
of political preference involved, as to who is to carry out invest- 
ment. Those who actually carry out investment activity might well 
pe the private sector in all cases. That is, what I call public invest- 
ment here may just be the part planned, financed or otherwise sup- 
ported by the government — that doesn’t change my formulae. If, 
1s has been suggested, a bigger and better model were developed, 
his might come out more clearly. I am personally not particularly 
ond of this kind of simple models, certainly not for planning pur- 
poses. I have just presented it, as I said, to use it as a base for 
criticism of a way of thinking. 
Now for the more specific points — ALLAIS made his points in 
‘wo rounds, perhaps we could take them jointly. Given my objective 
for this paper I don’t think the assumption about production capa 
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