Accelerator in Macroeconomics

Accelerator - coefficient of incremental capital intensity of national income, additional income obtained as a result of the multiplicative effect of the initial investment, which leads to an increase in demand for consumer goods. The sectors that produce them expand production, which causes an increase in investment demand for , while changes in demand for consumer goods cause stronger changes in demand for investment goods.

Creation History

In 1903, Thomas Carver published an article entitled “A Proposal for the Theory of Industrial Depressions” ^[1] , which is the source of the principle of acceleration ^[2] . And in 1909, A. Aphthalion published an article "Essays on the theory of periodically recurring crises. The reality of general overproduction ” ^[3] , where the accelerator itself and the accelerator itself were described for the first time, and in 1917, J. Clark 's article“ Business Acceleration and the Law of Demand; technical factor in economic cycles ” ^[4] , in which the author re-opens the accelerator effect and sets the accelerator model ^[5] .

Definition

The principle of acceleration is a process of additional output, depending on the growth in demand for investments due to the growth in sales of goods and income, and requiring more capital, thereby causing capital investment . The principle of acceleration is related to the fact that net investments (gross investments minus depreciation costs) are caused by changes in the volume of output and cannot decrease below the current depreciation rate, representing the rate of growth of capital stock, or by changing it over a period of time ^{[6 ]} .

Induced investments (gross investments minus investments for substitution) arise when demand grows when new production capacities are commissioned, when the effective demand exceeds the existing production capacities, and the volume of these investments is determined by the accelerator ^[7] .

Acceleration coefficient ( accelerator ) - coefficient of incremental capital intensity of national income, a numerical factor by which every dollar of incremental income increases investment ^[8] .

The change in demand for investment goods is considered as a function of changes in demand for consumer goods, and the growth of new (stimulated, induced) investments is defined as the product of the growth of income by the acceleration coefficient ^[9] :

I_{t}=v\cdot (Y_{t}-Y_{t-1})

{\ displaystyle I_ {t} = v \ cdot (Y_ {t} -Y_ {t-1})}

,

Where $I_{t}$ ${\ displaystyle I_ {t}}$ - induced investments, $Y_{t}$ ${\ displaystyle Y_ {t}}$ - national income

v=\Delta K/\Delta y

{\ displaystyle v = \ Delta K / \ Delta y}

,

Where $v$ ${\ displaystyle v}$ - accelerator $\Delta K$ ${\ displaystyle \ Delta K}$ - capital gains, $\Delta y$ ${\ displaystyle \ Delta y}$ - increase in output.

The accelerator effect is an increase in income, which leads to a multiple increase in , when, with the growth of autonomous investments, the multiplier effect acts, which, in turn, triggers the accelerator effect. The accelerator effect significantly enhances and accelerates changes in national income ^[6] .

Stock Accelerator Model

Assumptions for the principle of acceleration in the model of stock accelerator ^[10] :

inventories are proportional to the volume of output,
lack of excessive labor productivity,
lack of growth in labor productivity,
the availability of free labor
upon recovery, enterprises prefer to have high stock levels.

The level of stocks of the company is set ^[10] :

N=\beta Y

{\ displaystyle N = \ beta Y}

,

Where $N$ ${\ displaystyle N}$ - stock level, $\beta$ ${\ displaystyle \ beta}$ - the optimal number of stocks of the company per unit of output, $Y$ ${\ displaystyle Y}$ - release.

Then investments in stocks are proportional to changes in output ^[10] :

I=\Delta N=\beta \Delta Y

{\ displaystyle I = \ Delta N = \ beta \ Delta Y}

,

Where $I$ ${\ displaystyle I}$ - investments in stocks, $\Delta N$ ${\ displaystyle \ Delta N}$ - change in stocks, $\Delta Y$ ${\ displaystyle \ Delta Y}$ - change in output, acceleration of production, $Y$ ${\ displaystyle Y}$ - the volume of production per unit time, that is, this is the speed of production of goods.

With an increase in output, investments are made, increasing stocks, with a fall, investments are not made, and stocks fall. In his study of the US economy, N. G. Mankyu finds a formula for the dependence of GNP changes and investment in stock ^[10] :

N=0,2Y

{\ displaystyle N = 0.2Y}

,

that is, for every dollar of GNP growth, there were 20 cents of investment in stocks. And since investment in stocks depends on the level of the real interest rate, with an increase in it, the opportunity cost of storing stocks increases, and firms strive to reduce their stocks ^[10] .

Notes

↑ Carver TN A Suggestion for a Theory of Industrial Depressions // Quarterly Journal of Economics. - May 1903. - No. 17 . - P. 497-500.
↑ Hansen E. Economic cycles and national income // Classics of Keynesianism: in 2 volumes .. - M.: Economics, 1997. - T. 2 . - S. 158 . - ISBN 5-282-01823-3 .
↑ Aftalion A. Essai d'une théorie des crises périodiques. La réalité des surproductions générales // Revue d'Economie Politique, février pp. 81–117, mars pp. 201–229, avril pp. 241–259. - 1909.
↑ Clark JM Business Acceleration and the Law of Demand; A Technical Factor in Economic Cycles // Journal of Political Economy, Vol. 25. - March 1917. - P. 217-235.
↑ Blaug M. 100 great economists before Keynes . - SPb.: Ekonomikus, 2008 .-- S. 15-16 . - ISBN 978-5-903816-01-9 .
↑ ¹ ² Allen R. Mathematical Economy . - M .: Publishing house of foreign literature, 1963. - S. 72-74 .
↑ Accelerator // Great Soviet Encyclopedia : [in 30 vol.] / Ch. ed. A.M. Prokhorov . - 3rd ed. - M .: Soviet Encyclopedia, 1969-1978. .
↑ Hansen E. Economic cycles and national income // Classics of Keynesianism: in 2 volumes .. - M.: Economics, 1997. - V. 1 . - S. 381 . - ISBN 5-282-01822-5 .
↑ Tarasevich L.S., Grebennikov P.I., Leussky A.I. Macroeconomics: Textbook . - M .: Higher education, 2006. - S. 69 . - ISBN 5-9692-0044-1 . Archived February 22, 2016.
↑ ¹ ² ³ ⁴ ⁵ Mankyu N.G. Macroeconomics - M.: Publishing House of Moscow State University, 1994 .-- S. 662-664 . - ISBN 5-211-03213-6 .

[:1-1] Carver TN A Suggestion for a Theory of Industrial Depressions // Quarterly Journal of Economics. - May 1903. - No. 17 . - P. 497-500.

[:2-2] Hansen E. Economic cycles and national income // Classics of Keynesianism: in 2 volumes .. - M.: Economics, 1997. - T. 2 . - S. 158 . - ISBN 5-282-01823-3 .

[:3-3] Aftalion A. Essai d'une théorie des crises périodiques. La réalité des surproductions générales // Revue d'Economie Politique, février pp. 81–117, mars pp. 201–229, avril pp. 241–259. - 1909.

[:4-4] Clark JM Business Acceleration and the Law of Demand; A Technical Factor in Economic Cycles // Journal of Political Economy, Vol. 25. - March 1917. - P. 217-235.

[:5-5] Blaug M. 100 great economists before Keynes . - SPb.: Ekonomikus, 2008 .-- S. 15-16 . - ISBN 978-5-903816-01-9 .

[:6-6] ¹ ² Allen R. Mathematical Economy . - M .: Publishing house of foreign literature, 1963. - S. 72-74 .

[:7-7] Accelerator // Great Soviet Encyclopedia : [in 30 vol.] / Ch. ed. A.M. Prokhorov . - 3rd ed. - M .: Soviet Encyclopedia, 1969-1978. .

[:8-8] Hansen E. Economic cycles and national income // Classics of Keynesianism: in 2 volumes .. - M.: Economics, 1997. - V. 1 . - S. 381 . - ISBN 5-282-01822-5 .

[:9-9] Tarasevich L.S., Grebennikov P.I., Leussky A.I. Macroeconomics: Textbook . - M .: Higher education, 2006. - S. 69 . - ISBN 5-9692-0044-1 . Archived February 22, 2016.

[:10-10] ¹ ² ³ ⁴ ⁵ Mankyu N.G. Macroeconomics - M.: Publishing House of Moscow State University, 1994 .-- S. 662-664 . - ISBN 5-211-03213-6 .

Accelerator in Macroeconomics

Creation History

Definition

Stock Accelerator Model

See also

Notes

More articles: