Letter to C.F. Roos

Title

Letter to C.F. Roos

Description

Transcript of a letter from Tinbergen to dr. C.F. Roos.

Recipient

Roos, C.F.

Language

English

City

Colorado Springs, CO

Date

1936

Date in document

yes

Formulas or calculations

yes

Inventory number

NL-RtEUR_TBCOR01_008R009

1154

Storage location

Specifiek Magazijn

DOI

http://dx.doi.org/10.15133/ul/tinbergen_sent/1154

Filename

CDM1154_NL-RtEUR_TBCOR01_008R009.pdf

Provenance

Jan Tinbergen

Accrual Method

donation

Rights

CC BY 4.0 - Attribution 4.0 International

Revised transcript

en 10B/12809/12653
GENEVA, October 13th, 1936
Dear Dr. Roos,
It is with extreme interest that I read your book "Dynamic Economics"; especially because here you have applied your methods of analysis to actual figures. I am writing to you to ask you a question about the chapter on the building trade in St. Louis. Investigating the influence of credit on volume of investment, I was struck by your analysis stating that the most important factor for building activity is the foreclosure rate, which you consider as an indicator of the credit situation. I think the first part of this statement is, after your analysis, quite convincing, but I don't agree with you that the foreclosure rate is an indicator of the credit situation in the sense as is meant in business cycle theory. Now this is, to some extent, a question of words. Of more importance is the further question by what factors the foreclosure rate itself chiefly is determined. I would have thought - and other people with whom I discussed this question have agreed with me - that it is largely determined by the demand-supply-situation in the market for "housing services". This fits very well with your figures on foreclosures per 100.000 families which show a higher correlation with vacancies. So I reach the conclusion that for a large part new house building in St. Louis was determined by factors in the housing market itself that therefore the long waves in building (also found by J.H. Riggelman, Journal A.S.A. 1933 (XXVIII) p.174, for the States as a whole) are largely of an endogenous character, similar to the type of movement I described in my paper "Ein Schiffbauzyklus" in "Weltwirtschaftliches Archiv" of 1931, p.152. Unfortunately I have no copy left to include, but the chief point is that the increase x? per unit of time of the house "stock" x is determined by an equation of the type
x?(t) = - a x (t - ?)
where a and ? are only slowly changing data and where x is measured as deviations from its trend.
I am now making a closer analysis, the results of which I shall no doubt send to you; but I should be very much obliged to know whether you agree with the principal thought in the above. Thanking you in advance, I am
Yours very sincerely
(J. Tinbergen)
Dr. C.F. Roos
Cowles Commission for the Advancement of Science
Mining Exchange Building
COLORADO SPRINGS. (Colo)
U.S.A.

extracted text

10B/12SÖ9/12653

Q^mmk, OetolMr mh,

1936

DüüT Sr. Hooa,
I t 18 witb «Ktram latex-ast t h a t lRi3raa& your book "Dpnaoio
laoaomio©''; e s p e c i a l l y baoaiiisa kere you iiave applied your metbods of aisa^lr&is t o aotual f i g u r e s . X am wjritii^a; t e you t o
aak you a qtieetioo abcaat t h t ahapter on the b u i l d i n g traöe in
St. Louis. I n v e s t i ^ a t i a g the influenos of o r s ö i t on volusta of
i n v a a t e e n t , I isfea s t r u c k by your analyaiB s t a t i n g that the most
i»pcrt&nt factor for b u i l ö i n ë a c t i v i t y i s the foreolosura r a t a ,
whieh 3«ou öossidsy as an i a a i o a t o r of the o i e d i t s i t u a t i o n . I
think the f i r s t part of t h i s s t a t e ©ent i s , a f t s r your auaalysis,
(luite oonviaoin^, but I d o n ' t agrsa with you t h a t the foraolosura
r a t e i s an i n d i c a t o r of the o r a d i t s i t u a t i o n in tho ssnss as i s "
«aant in business oyoXa t h s o r y . Sow t h i s i s , to SOKS e x t e n t , a
question of words. 0f «ore i»portaao« i s the further q^uestion
by what f a o t o r s the fcraalosure r a t e i t s e l f o h i s f l y i s deterfpinad.
I would have t h c m ^ t - aM other i^opls with whoic I aisoussed
t h i s «question haira agraad with «a - t h a t i t ia l a r g e l y deteriainad
by the dsesa no-sup p l y - s i timtloa i n the oarket for '^housing s e r v i o a s '
f h l s f i t s vsfy wall wit*i your figures on foreolosures per 100.000
families whioh show a hlghaf o o r r a l a t i o n with vaosBoias. So I
reaeh the o o m l u s i o a t h a t for a large part new house building
in 3 t . Louis was istarffilnsd by f a o t o r s in the housing' aaxkat
i t s e l f t h a t therefore the long waves in builöia«2 {also found by
J.H. Siggalaaa. Journal A.S.A. 1933 (XXVIII) p . l 7 4 , for the S t a t e s
as a whola) are Xmem^V of an endo^eneous o h a r a o t s r , s i m i l a r to
the ty-Da of «tovematat t desoribed in sy paDSr "Bin Sohiffbauayklus'^l
itt " l e i t w i r t s o a a f t l i o h e « Aroniv'' of 19Ö1, xy.löB. unfortunately
I have no oopy l e f t to inoluüe, but the ohief point i s that tne
inoraass i per i m i t of time of the house "stook" x i s teteiminad
by a a equation of the type
i{t) « - a X (t -t)
«hare a and are only slowly ohangihé^ d a t a and «iiare x i s aaasursd
as d s v i a t i o a s fro» i t s |;r«aai.
I aa Ö0W «aklag a olosar a n a l y s i s , the r e a u l t s of *hioh I
Shall no doubt ssad to you; but I should be very much obliged
to know tshether you a^res with the p r i n o i p a l thought i n tae above.
Thaakihi you i n advanoa, I a©
iQvJin v«ry sinoerely

D£* w.F. Eoos
Qowlss Ceomission for the
Maanaoessent Bf Soiencs
Mining £xohan^e Building
COLORADO SPHISSS. (Colo)
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