Acceleration principle

term

capital goods (CAPITAL GOODS) Acceleration principle

: machinery, equipment and buildings to increase production capacity and built.

tightening (CONIRACTION): reducing economic activity.

empirical (EMPIRICAL): according to observation, especially statistical data obtained.

GDP (GROSS NATIONAL PRODUCT, GNP): without taking into account depreciation, the total output of the case to avoid double counting and family self-sufficiency and does not include illegal production of an economy.

Inventory investment (INVENTORY INVESTMENT): Increase in inventories; expand the scale of the inventory.

investment goods (INVESTMENT GOODS): increase the production capacity for all goods, including durable and capital goods stocks.

produce

acceleration principle first appeared in Albert 阿夫塔里昂 (Albert Aftalion) of "periodic crises of overproduction" (1913), a book. Later in the J · M · Clark (J · M · Clark, 1917 Nian), A · C · Pigou (A · C · Pigou, 1927) and other people's writings, as it decided to invest in and explain the economic cycle principle to be explored.

But only to John Maynard Keynes (John Maynard Keynes, 1883 Nian 6 5 - April 21, 1946) proposed investment multiplier in "The General Theory of Employment, Interest and Money" in later, acceleration principle attracted people's attention.

content

(1) is not expected to lead to a function of investment income, but rather a function of the expected incremental revenue, that investment is not dependent on the absolute amount of expected revenue, but decided to variation thereof;

(2) a comparative accelerator size expected income investment variation width. If the acceleration is greater than one, the change is expected to cause a slight income investments more substantial changes in the table above for the first three years, sales increased by only 10,000, a net increase of 50,000 investment; if the accelerator is less than 1, a larger revenue the magnitude of the change causes a change in investment in smaller increments.

(3) to make the investment growth rate remains constant, continuous growth of income must be at a certain rate; if revenue growth is expected to slow down, investment will be reduced or stopped. This means that even if the income level does not drop, as long as the slow growth rate of investment may also cause a recession and overall economic recession.

(4) acceleration principle role is two-way, both to accelerate the increase, but also including accelerated reduction;

(5) acceleration principle premise of play is no capital stock idle.

Application

acceleration principle applies to any investment product. If the growth rate of demand for some commodities fell, this principle indicates that demand for investment goods production of this commodity will also drop. Among them, one of the most interesting application is the construction industry. If a Community rapid population growth, the construction industry more than the service provided by the demand will rise rapidly, thus the construction industry will explode. If you let the population continues to grow but slow down the pace, then the required number of new homes will fall, do not realize that the population growth rate reduced housing construction are likely to overbuild, which can only lose money selling new homes.

Another interesting application is the inventory investment, also known as inventory changes. Inventory investment refers to the increase in the number of certain inventory, rather than an increase in inventories of species. Suppose a retail store to better serve its customer service, always we want to inventory and sales of roughly the same in each period.

acceleration principle of one of the most prominent application is its interaction with the Keynesian multiplier. Multiplier shows that investment spending will lead to an increase in revenue, thereby causing an increase in consumer spending; therefore, there is a multiplier effect of its GNP. Acceleration principle indicates that the increase in consumption will lead to increased investment. Thus, the initial investment increase due to the multiplier effect will lead to more consumption, increase consumption will lead to more investment, increased investment will lead to more consumption, and so on.

relationship

multiplier principle and acceleration principle of comparative

(1) multiplier principle explain how changes in investment income caused The change. In contrast, acceleration principle describes how to change due to changes in investment income, namely income effect on investment decisions.

(2) is a multiplier increased investment will lead to what extent the income coefficient increases; on the contrary, is an accelerator to increase income or consumption can cause what extent the investment coefficient increased. Problems

interaction between Multiplier Theory and accelerate the principle

"acceleration principle" and "multiplier theory" to explain varies. "Multiplier theory" to explain how slight changes in investment income will lead to a huge change occurred, and "acceleration principle" will have to explain how slight changes in income can lead to enormous changes in investment occurred. But the economic movement both explained and influence each other, complement each other. Macroeconomics is the use of so-called "accelerator" and "multiplier" of interaction, to "explain" cyclical fluctuations in the economy.

It is said that under the conditions of economic crisis, production and sales are down, acceleration principle role will make a sharp decline in investment, and the multiplier effect but also makes the production and sale of a further sharp drop reduced, the latter through the acceleration principle role will make the investments become negative (or disinvestment). Accelerate the number of interactions and multiplier, exacerbated by the cumulative production process of shrinking. Once when the company's capital equipment is gradually adjusted to the level of minimum income adapt, acceleration principle role will disinvestment stopped, a slight improvement of investment conditions will lead to revenue growth again, so a new cycle will re Start. Re revenue growth, but also through action accelerator, resulting in a new "lead investment"; which in turn through the multiplier effect, prompting a further sharp revenue growth, which will carry out the accumulation process of economic expansion. This cumulative process will push the national economy to the maximum limit of "full employment", and there were transferred to bounce back from recession. Macroeconomics to cyclical fluctuations in the economy, attributed solely to the income and investment between the two results for "accelerator" and "multiplier" of interaction. Although the so-called "multiplier" effect or "accelerator" effect is some objective process of social reproduction mechanisms of production exists, it will affect the process of capitalist economic fluctuations to a certain extent, but the roots of the capitalist cyclical economic fluctuations that the capitalist system itself, is inherent in capitalism's basic contradiction - socialized production and private capitalist possession of contradictions.

Related Articles
TOP