This chapter is dedicated to the role played by Michal Kalecki in the development of macro-dynamics. Like Tinbergen, he saw in linear differential–difference equations a possibility to account for regular economic fluctuations. But unlike the Dutch economist, he saw, on the basis of a new economic theory, a way to build around such an equation an economic model for the whole economy. It was Kalecki’s major breakthrough to recognize how the tools of Tinbergen could be combined with new economic ideas to account for the dynamics of aggregates.
The examination of the formal proximity that exists between Kalecki’s and Tinbergen’s early works highlights how much both shared a common view about the differences in the origins of growth and cycles. It also gives a new understanding of his distance with Frisch who, with reference to Schumpeter’s theory of innovation processes, argued that cycles resulted from growth and economic development.
Unlike Frisch who strove–and eventually managed, although not to the complete satisfaction of Schumpeter–to embody Schumpeter’s ideas on innovation, growth and cycles into a unique model, Tinbergen and Kalecki thought that growth and cycles were two independent phenomena who required to be studied separately, while a close examination of Frisch’s model shows that its solutions significantly differ from the ones of Tinbergen’s and Kalecki’s models.
Posts in this section:
[chapter 5 posts]
Macrodynamics in wonderland: the race for profits in Kalecki (1933)