IT is not generally recognized by economists that where governmental contracyclical policies are concerned common sense is a particularly dangerous tool. Policiesautomatic or notwhich appear to be properly designed may very well turn out to aggravate fluctuations.' Miscalculations on delicate questions of timing or magnitudes can be crucial, and these matters may well be out of the range of competence of the good judgment and experience of most of the practical men who determine or advise on our monetary and fiscal policies. This article describes tools which can be used to deal with at least some simple variants of these problems. Such tools can be particularly useful in indicating the nature of the pitfalls in the area. In particular, I will describe two rather plausible types of contracyclical fiscal policy and show that they can lead to some rather surprising results. i. The model and some contracyclical policies. The discussion assumes that we are living in the world of the Samuelson accelerator-multiplier model.2 It will be recalled that the time path of national income, Y,, in that model is described by the second-order linear difference equation: Y, = consumption + acceleration investment + autonomous investment + net government outlay = kYt_1+c(Yt_Yt2) +A +Gt where k is the marginal propensity to consume and c is the relation of the acceleration principle. In other words, we have:

Wesley J. Yordon, Jr., Industrial Concentration and Price Flexiblility in Inflation: Price Response Rates in Fourteen Industries, 1947-1958, The Review of Economics and Statistics, Vol. 43, No. 3 (Aug., 1961), pp. 287-294

GOVERNMENTS in various underdeveloped countries have progressively assumed direct responsibility for economic growth and have often relied on borrowing from central banks to finance a part of their investment outlay. Consequently, central banks now have less freedom than before in the exercise of their monetary policy. However, monetary policy in these countries can still influence private outlay in such a way as to supplement or offset public expenditure and contain total effective demand within limits compatible with price stability. The present paper studies the case of India where the Government, through its Plans, has endeavored to step up public investment. The purpose of the paper is to focus directly on the policy decisions of the central bank the Reserve Bank of India. By directing attention to the accounts of the Bank, the present study reviews critically the Indian monetary policy since the beginning of the first Plan in 195I. Since the purpose is to evaluate monetary policy, the impact on Bank's accounts of fiscal operations and of the changes in foreign assets is assumed as given. In terms of Bank's assets, the changes in net claims on government directly influenced by government budgets and changes in foreign assets are considered as outside the scope of monetary policy.' It is further assumed in this paper that the objective of monetary policy is to maintain the prices of the previous year. Money Supply and Price Changes

T HE proposition has been advanced by Dobb that . . where wage-earners are strongly organized in trade unions, one might expect labour to succeed in obtaining a larger share of the product than elsewhere. ' While there are several alternative forms in which this hypothesis may be stated, only one such will be examined in this paper. Accordingly, the purpose of this study is to test the hypothesis that labor's relative share of the income produced by manufacturing industries in the United States is, in some significant sense, positively correlated with the degree of union organization or, alternatively, with changes in the degree of union organization. The principal finding is that no significant correlation can be established and, therefore, it is concluded that the hypothesis must be rejected. While the results of this study, as it turns out, do not differ substantially from those of other research more or less closely related to it,2 the methods and procedures used are believed to be different and to possess at least some general validity. It is contended, therefore, that more credibility can be attached to the results contained in this paper than to those of related studies. In particular, the research design employed here incorporates two principal innovations. First, the data are those of individual industries rather than of sectors of the economy or the nation as a whole. Since it is neither the nation nor arbitrary sectors of it that have been unionized, but rather concrete, identifiable, individual industries, the use of data flowing from the latter would seem to be appropriate if one is seeking to isolate the impact of unionism on distributive shares. Second, the method is essentially one of employing a simple trend analysis to determine the intra-industry behavior of labor's share over the long-run. This is in opposition to the currently popular, but potentially misleading, terminial-years approach. There is no reason to expect a priori that any set of results obtained from a mere comparison of two more or less widely separated end years will not be vitiated by analysis of the data from another set of end years. Only in the case where the deviations from the trend are consistently small does a terminal-years approach appear to serve the purpose as well as a trend analysis. But since the trend must first be ascertained in order to determine the extent of such deviations, there would not seem to be any advantage in working only with terminal years. Because almost any result, depending only on the choice of years to serve as bench-marks, can be obtained by using this method, it would appear that no general validity can be associated with any particular finding.3 A trend