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Family Budgets and the So-Called Multiplier

Published online by Cambridge University Press:  07 November 2014

J. Marschak
J. Marschak*
Affiliation:
Oxford, England
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Extract

If for any national income and its given distribution we could estimate the amount of annual savings, we should be able to tell how much investment is necessary to make the aggregate receipts of entrepreneurs (plus the value of any additions to the inventories) equal to their outlay and thus avoid entrepreneurs' losses and shrinkage of output, and keep national income at a given level.

The relationship between national income and savings has been estimated in three ways: (1) by studying the relationship between incomes and savings of families, leaving the undistributed corporation incomes out of the picture; (2) by studying separately savings of wage-earners and of profit-receivers out of their respective incomes (distributed or not); (3) by confronting, through time, national income and investment. Only the first method will be discussed here.

If people adjusted their behaviour to changes in their income more quickly than they actually do, the family budget statistics could give an answer as to how a change in the total national income affects the national savings, apart from the undistributed profits of corporations. Actually, there is probably a time lag between income changes and changes in consumption and savings, which should be studied separately.

Type
Articles
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 5 , Issue 3 , August 1939 , pp. 358 - 362
Copyright
Copyright © Canadian Political Science Association 1939

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References

1 Transactions of the Manchester Statistical Society (Study Group), 1936; and Die Arbeit, 1928.

2 Review of Economic Studies, Oct., 1938.

3 Washington: Bureau of Labor Statistics and National Resources Committee.

4 Reported in Econometrica, 04, 1939, p. 180.Google Scholar

5 De Nederlandsche Conjunctuur, Nov., 1938.

6 Hence, 40-50 per cent would be a rough guess of the national marginal propensities to save, for the United States, 1935; this is confirmed, for the post-depression period, by plotting actual net investments against national income, using S. Kuznets's figures.

7 Cf. Lerner's paper at the Detroit meeting ( Econometrica, 04, 1939, p. 186 Google Scholar).