322 PONTIFICTAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 26 
city being proportional to capital is very central. Rut this would of 
course depend essentially on what alternatives are considered more 
realistic. I should also like to add an explanatory remark in con- 
nection with my assumption of constant population. The reason 
why I made this assumption here is one of simplification and at least 
off hand I don’t think that this particular assumption is central in 
explaining my main results. Then there was the remark that actually 
in statistical figures there is not very much correlation between the 
rate of public investment and growth. Well, I don’t know about 
that in detail, but I would dare say that probably we have not 
had so much of such policy that it would show up very much in 
the figures. My model illustrates more a policy that is being talked 
about, rather than a policy that has actually been carried out in 
full. Then there was the point about business cycles as an element 
in the model. I admit that this is not a business cycle theory and 
it was not meant to be. I have made the strong assumption about 
cyclical movements in private investment just to see how the system 
works if investment runs that way. I could refer to many sources 
where assumptions have been made about the autonomy of private 
investment. 
Then there was the comment from Mr, FisHer. He correctly 
pointed out, in connection with the formula he referred to, that if 
you want to consider matters over time, of course the amount of 
capital changes gradually. Now the point of the formulas on page 7, 
which he referred to, is just to make some comparative studies, 
assuming that you could instantaneously shift the rate of private 
investment around, since this is the autonomous factor in my mo- 
del. I just wanted to see what the instantaneous effect is and I 
can also, at the same time, answer another comment that comes in 
here. I am not saying that it is bad that you get more consumption 
and less investment or that it is good that you get high growth and 
lower consumption. I'm just saying that I doubt very much 
whether cyclical movements in the preferences are realistic. I will 
also add that one must be aware of the essential dynamic aspects of 
the model. It is by no means certain that you will not in the se- 
[81 Haavelmo - pag. 20