Journal Article A Note on Long-Run Unemployment Get access M. Kalecki M. Kalecki Lake Success, N.Y. Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 18, Issue 1, 1950, Pages 62–64, https://doi.org/10.2307/2296106 Published: 01 January 1950

Journal Article A New Approach to the Problem of Business Cycles Get access M. Kalecki M. Kalecki United Nations , Lake Success Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 16, Issue 2, 1949, Pages 57–64, https://doi.org/10.2307/2295715 Published: 01 January 1949

Journal Article The Work of Erwin Rothbarth Get access M. Kalecki M. Kalecki Montreal Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 12, Issue 2, 1944, Pages 121–122, https://doi.org/10.2307/2296098 Published: 01 September 1944

The Supply Curve of an Industry under Imperfect Competition Get access M. Kalecki M. Kalecki Cambridge Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 7, Issue 2, February 1940, Pages 91–112, https://doi.org/10.2307/2967473 Published: 01 February 1940

Journal Article A Theory of the Business Cycle Get access Michal Kalecki Michal Kalecki London Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 4, Issue 2, February 1937, Pages 77–97, https://doi.org/10.2307/2967606 Published: 01 February 1937

1. IT WAS a great achievement of Gibrat2 to show that the distribution of the logarithms of some economic variates (for instance, the distribution of factories according to the number of workers) is approximately normal. The explanation of this phenomenon by Gibrat may be presented in a rigorous form as follows: Let us denote the variate X (for instance the number of workers in a factory) at a certain date by XO. Let us further assume that subsequently it undergoes a series of random independent proportionate changes mi, M2, *, mn, (Gibrat's loi de l'effet proportionnel).3 Thus at the end of the period in which these changes have taken place the value of the variate will have become XO(1+ml)(1M+m2) * (1 ++m,) and its natural logarithm=log Xo+log (1+ml)+log (1+m2)+ + +log (1 +mn). If we denote the deviation from the mean of log XO by Yo and the deviation from the mean of log (l+mk) by yk, the deviation from the mean of this expression becomes YO+yl+Y2+ +Yn. The absolute value of mk may be assumed small as compared with 1. It follows that the absolute value of log (1 +mk) and consequently that of yk is also small as compared with 1. As the second moment of yl+y2+ * +y. is equal to the sum of the second moments of Y1, Y2, * .., yn, it may be assumed that if n is sufficiently large the standard deviation of Yl+y2+ * +yn is equal to or greater than 1 (provided the standard deviation of yn does not fall below a certain level as n increases.) Thus yk is small as compared with the standard deviation of Yl+Y2+ +Yn. With this condition fulfilled the distribution of Yl+Y2+ +y,, is approximately normal (according to the Laplace-Liapounoff theorem4). Further if n is so large that the standard deviation of yl+y2+ + yn is large as compared with the standard deviation of Yo also, the distribution of Yo+yl+y2+ * * * +yn will not differ much from normality. Whatever the distribution of Y at the initial date, with the lapse of time it approaches normality more and more. 2. This argument is formally correct but it may be shown that its

CERTAIN questions have arisen' concerning my macrodynamic theory of business cycles2 which I consider of sufficient importance to warrant a detailed answer. I also wish to complete some parts of my original study which I think were presented too briefly. 1. Tinbergen makes the statement concerning my original article that, remarkably enough, prices do not appear at all in the theory.3 It can be easily shown that in reality my basic equation implies the dependence of investment activity on the ratio of prices to wages. My basic equation was4

controls, has found many advocates. The idea of employing OPA methods of price control without rationing would be patently stupid. The establishment of maximum prices which are below free market prices and not coupled with official rationing would create a strong excess demand and would force distribution of the goods to be accomplished through private rationing techniques of retailers favoritism or through first-come-first-served techniques standing in lines or through secret price premiums black markets. Hence, rationing by the government would have to be introduced in order to permit an orderly distribution of the commodities, which would all be scarce at prices fixed below the free market level. In peacetime, without the strong feeling of urgency in the striving for a universally accepted goal, such a system would provide increased incentives to consume the goods, reduced incentives to produce them, increased incentives to break the law, increased incentives to enforce red tape, increased incentives to use arbitrary power and restrict individual freedoms. It would be a disequilibrium system, making shortages and excess demand a chronic condition, without hope for correction and with increasing difficulties of enforcement. It is not intended here to oppose rationing of anything under any circumstances. One may make a plausible argument for resorting even in peacetime to direct controls for a few selected things under very specific circumstances; to wit, (i) if the object of control is a necessity (such as bread, not meat), (2) if the elasticity of its supply in the short run is practically zero, (3 ) if the elasticity of demand for it is very low, and (4) if it can be reasonably and safely expected that the will be over soon, for example, because demand at the controlled price will greatly decrease or supply greatly increase in the very near future. One may conceivably even argue, although less plausibly, for a general price reduction scheme with general rationing if there is evidence that the reduced prices will within a very brief time be the equilibrium prices owing to an imminent decline in demand or increase in supply. No sound argument, however, has thus far been presented to justify direct controls to enforce a general roll back of prices if neither a decline in demand nor an increase in supply is in sight. From this point of view, the United States is not in an emergency expected to pass quickly. We cannot expect a drastic reduction in demand in the near future nor do we wish for it -and production is now at a rate as high as we can possibly maintain.