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Title
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Letter to P.C. Mahalanobis
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Description
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Annex: copy of the same letter.
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Date
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1954
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Date in document
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yes
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Formulas or calculations
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no
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Inventory number
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NL-RtEUR_TBCOR01_028A018
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7347
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Storage location
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Specifiek Magazijn
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Filename
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CDM7347_NL-RtEUR_TBCOR01_028A018.pdf
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Provenance
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Jan Tinbergen
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Accrual Method
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donation
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Rights
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Revised transcript
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en
Afschrift
PROF. DR J. TINBERGEN THE HAGUE, 18 August 1954 Sijzenlaan 41
Professor P.C. MAHALANOBIS F.R.S. 8, King George Avenue, New Delhi 2
Dear Professor Mahalanobis,
As I wrote to you in my previous letter I had the pleasure of discussing with Dr Mukherjee the problems involved in your development model, and I would like to present a short comment using the usual symbols for the economic variables and your symbols for the co-efficients.
Variables : Y national income = C + I (1)
C consumption
M investment in machines for consumer goods industries
E investment in equipment for investment goods industries
I total investment = M + E (2)
Equations : Apart from the two already mentioned there are two technical equations,
? = ?c M (3)
? = ?i E (4)
There has to be one more equation between the 5 variables, for which you chose an equation M = ?c I (5) and I am inclined to choose I = ? Y (5')
I think we can agree on assuming the two ?'s to be constants; my preference would be in addition to assume ? to be constant, representing the saving ratio of the country whereas you seem to prefer to introduce ?c as a constant which implies that ? would not be a constant. My difficulty may be formulated in this way that I do not see any economic meaning in ?c whereas the meaning of ? is clear to me, as there has been observed a constancy in ? over averages of business cycles which would make it an easy starting point for analysis. It is true, however, that this constancy need not prevail in the future, especially if we may hope for important capital imports. Even in this latter case, however, I do not see any reason to consider ?c to be constant. I do see, however, the desirability of investigating alternative developments which may be conceivable by changing certain instruments of economic policy. In such a case I prefer tot specify and define beforehand what instruments of economic policy would have to be considered.
Yours very sincerely,
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annexCount
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1
