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History of Political Economy 34.1 (2002) 207-218
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On the Origin of Samuelson's Multiplier-Accelerator Model
Arnold Heertje and Peter Heemeijer
It is not always easy to pinpoint the intellectual provenance of a scientific theory or model. Many ideas of colleagues and predecessors influence a particular scholar who is on the brink of developing a new approach. Such influences are not only unavoidable but also necessary for the inventor to collect the knowledge and inspiration allowing him to formulate ideas of his own; ascribing a theory to a single person would in most cases be a simplification. As compared to the exact sciences, in economics this process is even more complicated, as observations are often ill structured and subjective, especially when the field of research does not lend itself to a mathematically inspired analysis. We may quote Paul Samuelson (1959, 183) in this respect: “Scientific theories are like children in that they have a life of their own. But, unlike children, they may have more than one father.”
In this article we intend to establish who exactly were the “fathers” of an important and well-established model written by the same Paul Samuelson. We will investigate its intellectual genesis and see to what extent the historical records conform to common belief. As we will show, there is little factual support for Samuelson's suggestion ascribing the model mainly to Alvin Hansen, his mentor in the days of the creation of the model. Instead, the evidence indicates that Roy Harrod played [End Page 207] the major role in the development of research leading to the multiplier-accelerator model. In the end, though, we will not propose to affix Harrod's name to the model, concluding that there appears to be no reason to change the custom of associating only Samuelson's name with it.
1. Samuelson's Model
When it comes to scientific research in the area of business-cycle movements, the thirties were a very productive period. At the beginning of the decade, the Great Depression shook the very foundations of the modern world, causing great damage to virtually all advanced countries and laying a responsibility on the international economics community to explain these frightening recurring downward movements in the level of production and to possibly find a cure for them. Several renowned economists went to work and constructed theories of every shape and form, ranging from the monetary overinvestment theory by Friedrich von Hayek and the theory of mass psychology by A. C. Pigou to the theory of innovative entrepreneurship by Joseph Schumpeter.
This development culminated in the publication of two books by the League of Nations that presented a theoretical survey of all advancements up to then in the explanation of the driving forces behind the business cycle. The first, written by Gottfried Haberler (1937), had a thorough and verbal character. The second, which complemented Haberler's work with the necessary statistical testing, was provided by the Dutch pioneer of econometrics, Jan Tinbergen (1939).
Although great progress had been made up to that point, none of the existing business-cycle theories was yet able to explain, in a brief and intelligible way, the movement from boom to depression and back in a fully endogenous manner.1 They all used external shocks or at least stimulating and depressing movements in variables that were not explained by the respective models themselves. This theoretically handicapped situation ended when early in 1939 a new model sequence was developed by Paul Samuelson (1939a) that was able to produce cyclical movements using only an exogenous flow of constant governmental [End Page 208] expenditure. Still in his early twenties and studying as a research fellow at Harvard University, Samuelson revolutionized research into business cycles and raised our understanding of changes in the scale of economic activity to a new level.
And along with it rose the star of the student Paul Samuelson himself. Mathematically able as he was, writing the short 1939 article containing the relatively simple model (which will be described below) was a task of little effort...