Full text: Brief von Josef Steindl an Jerzy Osiatyński

A-11o3 Wien, Postfach 9"! 
9th October 1975• 
Dear Osiatynski, 
Thank you f->r your letter. 
1. The coefficient m h^s definitely the dimension of time, just as 
the lag 0 } this is because it accurs as the coefficient of 
a "velocity" sthe change of investment per unit of time, 
which must be multiplied by a time dimension in order to yi&ld 
A 1 A- 
^a contribution to^the rate of investment. ~ ~Z^T~ 
The economic me a ning of the inequality^.is simply 
that the response to the change in investment ( or to profits 
must not be too strong in relation to the lag £) , or else 
there will be very large growth rates. The condition, I think, 
is not implausible, because a somewhat related condition is 
necessary in the business cycle theory to ensure that the cycle is 
damped. 
My reason for excluding oase II and case III is precisely 
that they would produce unrealistically large growth rates. 
In this context i& must be noted that Kalecki^s model of the trend 
treats mainly the problem of effective demand. The restrictions 
which in reali^ty are placed on growth by the condition s of 
supply are not discussed in any detail; they enter the mathematical 
formulation only via the lag 9 , which limits the speed of 
accumulation. You may remember a paper of fc. dealing with 
limitation of the speed of accumulation in Poland especially in the 
coal mines: he showed that owing to lack of skilled manpower 
the attempt to increase the investment mayx beyond a certain 
level may simply lead to an increase in the period required to 
execute investment projects, in other words, the lag 6 
Thus ¥ ou may say that if the investment response m would increase 
too much, the lag ^for the reasons indicated, would increase even 
farther ^ - because of restrictions on the supply side, in the 
last resort^ because the speed at which people can learn is limited. 
2. The 1968 paper is not materially different from the earlier 
trend theory but rather in the mathematical approach; all or most of 
the trend generating forces appear now in form of a function of time, 
i.e. o n the face of it they are treated as exogenous. The verbal 
explanations^, however, make it quite clearfthat Kalecki continued
	        

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