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Contents: Acknowledgements General Introduction Howard R. Vane and Chris Mulhearn PART I RAGNAR A.K. FRISCH Introduction to Part I: Ragnar A.K. Frisch (1895 - 1973) 1. Ragnar Frisch (1933), 'Propagation Problems and Impulse Problems in Dynamic Economics' 2. Ragnar Frisch (1934), 'Circulation Planning: Proposal for a National Organization of a Commodity and Service Exchange' and 'Circulation Planning: Part III. Mathematical Appendix' 3. Ragnar Frisch (1936a), 'Annual Survey of General Economic Theory: The Problem of Index Numbers' 4. Ragnar Frisch (1936b), 'On the Notion of Equilibrium and Disequilibrium' 5. Ragnar Frisch (1981), 'From Utopian Theory to Practical Applications: The Case of Econometrics' PART II JAN TINBERGEN Introduction to Part II: Jan Tinbergen (1903-94) 6. J. Tinbergen (1940a), 'Econometric Business Cycle Research' 7. J. Tinbergen (1940b), 'On a Method of Statistical Business-Cycle Research: A Reply' 8. Jan Tinbergen (1952), 'The Logical Structure of the Normal Quantitative Policy Problem (Targets and Instruments in Equal Numbers) Directives' and 'Inequality Between Number of Targets and Number of Instruments: Alternative Instruments or Incompatible Targets' 9. Jan Tinbergen (1959), 'An Economic Policy for 1936' PART III LAWRENCE R. KLEIN Introduction to Part III: Lawrence R. Klein (b. 1920) 10. Lawrence R. Klein (1947), 'Theories of Effective Demand and Employment' 11. Harold Barger and Lawrence R. Klein (1954), 'A Quarterly Model for the United States Economy' 12. L.R. Klein (1958), 'The Estimation of Distributed Lags' 13. Lawrence R. Klein (1964), 'A Postwar Quarterly Model: Description and Applications' 14. Gary Fromm and Lawrence R. Klein (1965), 'The Brookings-S.S.R.C. Quarterly Econometric Model of the United States: Model Properties' 15. Phoebus J. Dhrymes, Lawrence R. Klein and Kenneth Steiglitz (1970), 'Estimation of Distributed Lags'

This paper recalls some early work of the Dutch pioneers of long-wave research which anticipated many of the contemporary debates. Various explanations which have been advanced for the existence of long waves are reviewed, and the applicability of long-wave theories in a number of contexts is examined.

Some problems of business cycle policy are considered with the aid of a simplified model of dutch business life. This model is described by 21 equations, the meaning of which has been discussed elsewhere. In the present article special attention is given to the influence of a given cyclic movement of foreign prices and demand on profits and employment in the Netherlands, under different regimes of economic policy. Chart 1 shows the movements under existing conditions, chart 2 those occurring under a regime of „compensating public investment”, chart 3 those under a regime of „compensating exchange rates” and chart 4 gives the consequences of a combination of these two forms of business cycle policy. In a somewhat more general way the question is treated which among a greater number of possibilities would constitute the „best” policy and it is argued that a combination of „compensating exchange rates”, „compensating public investment”, stabilisation of consumption outlay and reduction of speculation opportunities would show the best results. Finally the question of „directives” as distinguished from that of the „instrument” of business cycle policy is discussed somewhat nearer. The author is of the opinion that a useful directive for the different forms of business cycle policy discussed is to be seen in the „tension barometers” given by the Central Bureau of Statistics in De Nederlandsche Conjunctuur (August 1936, p. 16–17).

In his polemic reply Tinbergen defends the econometric method he applied. He reproaches Keynes for the inaccuracy of his argument and justifies the applicability of linear relationships in economic analysis and their existence in economic interactions. Tinbergen also provides a detailed account of some methodological (primarily addressing the problem of causality) and economic issues of his analysis. In a comment to the Tinbergen’s paper Keynes clarifies his point of view on some particular points as well as on econometrics as a whole.

textabstractAlso published in: A.H. Hansen and R.V. Clemence (Eds), Readings in Business Cycles and National Income, Allen & Unwin, London, 1953, pp. 357-375

In a recent investigation which the author has made for the League of Nations Secretariat, it was found that share prices seem to have exerted a considerable influence on the course of the American cycle beginning in 1924 and having its boom year in 1929. The chief reason for this influence may be summarized briefly as follows: (a) Share prices have an influence on the ease with which capital issues may be floated and therefore on investment activity in general; (b) the rate of increase in share prices seems to have an influence on consumption, especially by those making capital gains. These influences have been investigated in the forthcoming League of Nations publication and will not be treated in detail now, but it may be seen from this brief indication that the formation of share prices seems to be important in the explanation of some business-cycle phenomena. This is the justification for the present paper, which deals only with that price formation.

textabstractThe present study consists of two kinds of approach: (1) a statistical research into the chief dynamic equations describing American business cycles between 1920 and 1932 and (2) a number of more general methodological remarks on this type of research with particular attention to problems of policy. In order to simplify exposition in many points, it seemed desirable to exemplify the general thought immediately; and for this reason the two approaches are more or less mixed.

Much attention has recently been given to the so-called " acceleration principle " or " the Relation " as Mr. Harrodl calls it. Developed by Professors Aftalion, Bickerdike, Bouniatian, Carver, Fanno, Kuznets and Pigou, it has been given special attention by Professor J. M. Clark in his splendid survey Strategic Factors in Business Cycles3 ; and has obtained a place in many theories of the business cycle. Professor Haberler,a from whom part of the above references are taken, also uses it in his own synthesis of theories ; Mr. Harrod regards the acceleration principle and the multiplier principle acting in combination as the chief forces in trade cycles. Quite recently Dr. Chait4 has developed a theory ikplying as special iases both the acceleration principfe and the multiplier principle.

In recent years various attempts have been made to construct econometric models of the business cycle mechanism.l Some of them are very simple, others more complicated ; some pay more attention to the mathematicoeconomic set-up, others give special care to a statistical determination of the coefficients involved. The latter group is notable for, in particular, the model by Radice of the post-war United Kingdom that by De Wolff of post-war Sweden and my own attempts for the Netherlands and the United States. As far as I am myself concerned, a " model under construction " is that for the United Kingdom between 1870 and 1914. An essential feature of an econometric model is, I think, that it combines mathematico-economic treatment with statistical measurement of some type. The 'ultimate objectives of these models are the same as of any system of business cycle research, viz. (i) to explain historical events ; (ii) to forecast future developments under certain conditions ; and (iii) to indicate the probable consequences of measures of business cycle policy. Within the framework of these ultimate objectives, one may distinguish more proximate objectives. These may be separately stated for the economic and the statistical parts of the task.