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ROBERTSON’S INDUSTRIAL FLUCTUATION (1915): AN EARLY REAL BUSINESS CYCLE-LIKE APPROACH

Published online by Cambridge University Press:  19 December 2016

Pascal Bridel
Pascal Bridel*
Affiliation:
Université de Lausanne, Centre Walras-Pareto, Switzerland. [email protected]
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Abstract

This paper re-examines Dennis Robertson’s ‘real’ business cycle (RBC) theory outlined in his 1915 A Study in Industrial Fluctuation. Even if, for Robertson, cycles find their origin and respond to oscillations in entrepreneurs’ “rational inducement” to invest, in opposition to RBC models in which every outcome is by construction an equilibrium outcome, Robertson discusses in a traditional way the short-run consequences of such exogenous technological shocks. There are no intertemporal equilibrium phenomena in the sense of the RBC approach; cycle theory is organized, for Robertson, around a Marshallian-defined center of gravity (or long-run equilibrium state of rest). For him, the real forces are represented by the gestation period of investment, but also by investment’s durability, its imperfect divisibility, and, allied with these, its intractability. These features of investment lead to excessive outlays upon capital investment, which ultimately depresses their marginal productivity. The inevitable and rational result is a downturn in the capital goods industries and the onset of a cycle.

Type
Articles
Information
Journal of the History of Economic Thought , Volume 39 , Special Issue 1: Special Issue: Business Cycles and Economic Growth , March 2017 , pp. 35 - 46
Copyright
Copyright © The History of Economics Society 2016 

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