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Title
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Letter to P.C. Mahalanobis
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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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yes
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Inventory number
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NL-RtEUR_TBCOR01_021M007
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8644
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Storage location
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Specifiek Magazijn
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Filename
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CDM8644_NL-RtEUR_TBCOR01_021M007.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
PROF. DR J. TINBERGEN THE HAGUE, 18 August 1954
Sijzenlaan 41
301 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 to specify and define beforehand what instruments of economic policy would have to be considered.
Yours very sincerely,
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extracted text
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THE HAGUE, 18 August 1954
S i j z e n l a a n k^
PROP. DR J . TINHERGKR
P r o f e s s o r P . O . MAHALAl^OBIS
8, King George Avenue,
New Delhi 2
^ Qi
P.R.S,
Dear Professor Mahalanohis,
As I wrote to you in ray previ-^us l e t t e r I had the
pleasure of discussing with Dr MiiMaarjae the problems involved
in your develop/aent model, and I would l i k e to present a
short coinment using the usual symbols for the ecorioraic
v a r i a h l e s and yoiir syrtfools for the c o - e f f i c i e n t s .
: Y
n a t i o n a l income = G + I
(1)
Variables
0
consumption
M
Investment in machines for
consumer goods i n d u s t r i e s
E
investment in equipment for
investment goods i n d u s t r i e s
1
t o t a l investment = M + E
(2)
Apart from the two a l r e a d y mentioned
Equations
there a r e two teclinical equations,
é = p^ M
(3)
(k)
i = 3i E
There has to be one more equation
between the 5 variables for which you
chose an equation M = X I
(5)
and I am inclined to
choose I = a Y
(5')
I think we can agree on assuming the two p's
to be constants; my preference v^ould be in addition to
assiime a to be constant, representing the saving ratio
of the country v/hereas you seem to prefer to introduce
X as a constant which implies that a would not be a
cSnstant, My difficulty may be formulated in this way that
I do not see any economic meaning in X„ whereas the
meaning of a is clear to me, a s
there has been observed
a constancy in a 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, espeéially if we may hope for important
capital iiaports. Even in this latter case, however, I do
not see any reason to consider X
to be constant, I do
see, however, the desirability or investigating alternative
developments which may be conceivable by changing certain
instruments of economic policye In such a case I prefer
tot specify and define beforehand what instruments of
economic policy would have to be considered.
Yoiirs very sincerely,
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