the intuitive idea that the scale effect is of the same order of
magnitued fpr the economy as a whole as for say a petrol refinery
or other plant f>r which we know the value, ^'his is not entirely
arbitrary because one can argue that all the external economies
can really be reduced to internal scale effects in auxiliary
production functions
Niw to the trend paper. The reinvestment coefficient is really
the coeffient a/1-c in Kaleckis euqatim of the cycle and equally
in the equati n f r the trend (see the ry of economic dynamics
equati n 25* and 52 page 146 ) The equation f>r the ftsii is
and the equation f r the cycle is the same except that it lacks the
last two terms ( the trend equ refers of course to moving averages),
a is as it were a re-investment coefficiet in the narrower sense ~
indicating how great a prop rtion of its retained profit business
one as long as only business savings ore considered, but if you
apply it to the total savings of the economy it becomes very doubtful
(see my paper on household saving!). Moreover, the coefficient is
reduced if you consider also the adverse effect of capacity creatinn
which is represented by c. The whole coefficient a/1-c must be
below one, otherwise no cycle will materialise ( there is a wrong
statement about that in my paper on p.11, top ^hich has been
corrected in the meantime). Your remarks on the oil companies
buying up firms - which presumably implies at least for the time
being and for the ec n my as a wh le a kind of reducti n f
indebtedness - illustrates the tendencies which run c unter to
a reinvestment.
In the end I c nfess that I probably at one or the other place
used the terra reinvestment coefficient in the way in which you
underst ood it i e simply relation 'f investment to that of the
preceding peri d , taking the trend values. If the trend were
explained by a difference equation >f the first order such as
- k y t-i
then there would be no difference between the two meanings.
As to your second question about lag: No, the lag is that
of diffusion, which may be quite long - until(practically) everybody
has introduced the new method. That does not eaclude that you