Al. I Armii W.P. 11 m. 26
Warsaw, 20 Febr. 196?
Dear Steindl,
Thank you for your letter which crossed mine sent through
Sachs. Since is the increment of T during the year
a! r
considered it does not differ much from , where Ai_
is the increment over the period . In fact all the
argument on investment decisions could be developed for a small
period At rather than for a year and. then in all the
equations would be replaced by
T
Thus I resorted to A.J_ over an annual period only for the
sake of simplicity / as in my preceding paper Si Observations on the
Theory.of Growth” in Economic Journal /. I do not think that this
simplification interferes with the generation of the cycle.
My present theory of investment decisions differs nevertheless
substantially from the previous one for different reasons. I
assume now a much more definite pattern of the behaviour of the
entrepreneur which permits to s#how that a. a 1 .1 conduct the
argument only in terms of gross saving and gross investment and
I introduce explicitly the influence of the increase of producti
vity due to technical progress rather than using from the outset
the concept of depreciation and net investment /sections 4 and 5/.
Finally I explain the additional effect of innovations which is
based on a sort of ’’doublecounting” by the entrepreneurs /section
6/. The latter is important because it clarifies the problem
raised by Mrs Robinson that all the effects of innovations are
accounted for by depreciation.
; ,achs told me that you are quite well but that sfpu do not