Brief von Josef Steindl an Stanisław Gomułka

Steindl, Josef

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Document type:: Correspondence

Collection:: Josef Steindl Collection

Title:: Brief von Josef Steindl an Stanisław Gomułka

Author:: Steindl, Josef

Recipient:: Gomułka, Stanisław

Scope:: Typoskript, 3 Blätter, 3 Seiten

Place of publication:: Wien

Year of publication:: 1978-01-20

Source material date:: 20th January 1978

Language:: English

Note:: Durchschlag. - Beilage (2 Blätter) mit handschriftlichen Ergänzungen.

Shelfmark:: S/B.51

Access:: Free access

Supplement

Document type:: Supplement

Title:: Kalecki's trade cycle

Access:: Free access

Kalecki's trade cycle theory In its first version (Econometrics 1935) has been represented by a mixed difference - differential equation with a backward argument: I (t-<►) - a I(t) - b I (t) (1) This equation has been thoroughly investigated by Frisch and Holme (Econometrics 1935) and holds no surprises. All the later versions of Kalecki's theory have been represented by an equation of the type I (t + ^) - a I (t) + b/1 I (t) (2) This was always written with a finite A . Nonetheless many readers have tended to regard it as an approximation to the mixed difference - differential equation I (t+®0 - a I (t) + b I (t) (3) which in contrast to (1) has a forward argument. Equations (2) and (3) have not been analysed in the same way as (1). From unpublished work of Dr. Stanislaw Gomulka, London School of Economics, it appears that the equation (3) yields explosive cycles with a period smaller than the lag <r. As a result the initial conditions do not fade out in the solution and the process is not ergodic. This speaks against using equation (3). It appears that Kalecki knew very well why he wrote finite differences and that he did it on purpose. This can also be explained in economic terms. The last term in (2) and (3) indirectly relates to the influence of a change in profits on investment. Now business executives would hardly ob serve the change in profits from one second to the next, but much rather from one year to the next, when they decide about invest ment. The equation (3),in other words, implies unreasonable economic

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