"Some Accelerator–Multiplier Models" [2004] ELECD 195; in Minsky, P. Hyman; Papadimitriou, B. Dimitri (eds), "Induced Investment and Business Cycles" (Edward Elgar Publishing, 2004)

Book Title: Induced Investment and Business Cycles

Editor(s): Minsky, P. Hyman; Papadimitriou, B. Dimitri

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843762164

Section: Chapter 2

Section Title: Some Accelerator–Multiplier Models

Number of pages: 44

Extract:

2. Some accelerator-multiplier models
1. INTRODUCTION
In spite of the inability of statistical studies to establish that a measur-
able accelerator coefficient exists, many models of the business cycle have
appeared in which the accelerator coefficient is an institutional or engin-
eering constant. In addition to such constant valued accelerator models,
models of the business cycle have appeared in which the value of the accel-
erator coefficient varies over the business cycle. In general the mechanism
by which the change in the value of the accelerator coefficient is brought
about is not explicitly stated. Assumptions as to the existence of a floor or
a ceiling to investment due to the technological limitations upon disinvest-
ment and to the existence of a full employment ceiling (total or sectoral)
are made. In addition, a third variety of accelerator business cycle model
may be distinguished, one in which the model is subject to random shocks.
In this chapter models from each of these classes will be taken up. Variants
of such models will be constructed. We will see whether or not these models
are consistent with the hypothesis that the business cycle of experience can
be best analysed by assuming that the value of the accelerator coefficient
varies in a systematic manner over the business cycle, and that the system-
atic variation in the value of the accelerator coefficient can be imputed to
the economic phenomena associated with the different levels and rates of
changes in income.
In this chapter we are ...