Journal Article Impact of Unions on Wage Levels and Income Distribution: Comment Get access Lowell E. Gallaway Lowell E. Gallaway University of Wisconsin Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 74, Issue 2, May 1960, Pages 324–329, https://doi.org/10.2307/1884257 Published: 01 May 1960

I. Introduction, 79. — II. Expectations and conventional models of growth, 82. — III. A linear, variable accelerator, 87. — IV. Simple models of growth with variable accelerator, 90. — V. Conclusions, 92. — VI. Mathematical analysis, 95.

PpT HE term underdeveloped is often used to refer either to countries with low incomes or to countries in which the level of per capita income is not rising, without clear discrimination between the two concepts. The purpose of this paper is the simple factual one of presenting two classifications of all the areas of the world, one according to their levels of per capita income and one according to whether continuing rise in per capita incomes seems to have begun, and of noting the degree of congruence between the two lists.'

George E. Bates, Difficulties in Determining Investment Policies, The Review of Economics and Statistics, Vol. 42, No. 3, Part 2. Higher Education in the United States: The Economic Problems (Aug., 1960), pp. 214-218

Millard E. Gladfelter, State Aid for Private Institutions in Pennsylvania, The Review of Economics and Statistics, Vol. 42, No. 3, Part 2. Higher Education in the United States: The Economic Problems (Aug., 1960), pp. 91-92

What is the exact nature of the consumption function? Can this term be defined so that it will be consistent with empirical evidence and a valid instrument in the hands of future economic researchers and policy makers? In this volume a distinguished American economist presents a new theory of the consumption function, tests it against extensive statistical J material and suggests some of its significant implications.Central to the new theory is its sharp distinction between two concepts of income, measured income, or that which is recorded for a particular period, and permanent income, a longer-period concept in terms of which consumers decide how much to spend and how much to save. Milton Friedman suggests that the total amount spent on consumption is on the average the same fraction of permanent income, regardless of the size of permanent income. The magnitude of the fraction depends on variables such as interest rate, degree of uncertainty relating to occupation, ratio of wealth to income, family size, and so on.The hypothesis is shown to be consistent with budget studies and time series data, and some of its far-reaching implications are explored in the final chapter.

IN a growing economy, current replacement falls short of depreciation. The implications of this fact were discussed at length in a paper by E. D. Domar.' The nature of the subject did not allow Domar to indicate the relationship between the two magnitudes in explicit form; in their place he had to present numerical illustrations. In the case of the individual firm, we can go one step further. Obviously a firm that buys its equipment first-hand will accumulate depreciation funds ahead of the replacement necessity. If the firm decides to reinvest the depreciation allowance, its gross or operating capital, in terms of performance, will increase for some time, although of course the value of the net capital stock by definition would remain constant. This is so because the performance of adequately maintained equipment declines less in proportion to depreciation. At the same time the average lifetime of the equipment items making up the gross capital stock will change. Since the initially installed equipment has to be replaced at some time, the rise in the gross stock from reinvestment of depreciation allowances will be interrupted discontinuously: the gross stock will suffer an abrupt decline, after which it will rise again. Let us give a simple illustration, the basic premises of which will be specified later on. Suppose a railroad invests at the beginning of I957 $IO million worth of rolling stock of a lifetime of exactly ten years, and applies straightline depreciation, amounting at the beginning to $i million per annum. It reinvests after the end of each year the depreciation allowance which was set aside in the preceding year, in rolling stock of the same kind. Assuming that prices do not change, the stock would grow as follows: Beginning of I957 $IO million I958 i i million I959 I2.I million, etc.