Journal Article Boisguilbert: A Neglected Precursor of Aggregate Demand Theorists: Reply Get access Stephen L. McDonald Stephen L. McDonald University of Texas Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 70, Issue 1, February 1956, Pages 165–166, https://doi.org/10.1093/qje/70.1.165-a Published: 01 February 1956

M OST writers about the relation of capital to output in American manufacturing have been impressed by the tendency for the ratio to increase with size of firm. They have usually emphasized one explanation, although they have not agreed on the one that should be stressed. It is the purpose of this paper to present evidence not readily available that the tendency may not be as universal as often assumed and that, where it exists, the explanation is likely to differ from one industry to another. The usual analysis of capital ratios for American manufacturing has been based upon the industrial aggregates compiled by the Internal Revenue Service (formerly Bureau) of the Treasury Department.2 Accordingly it has not been possible for the investigator to analyze the capital ratios of each firm in relation to those of other firms with which commonly classified. In contrast, it was possible in the study reported here to examine the behavior of the ratios for each industry, firm by firm.3

The primary purpose of this study is to develop a model based on linear programming and input-output techniques which will assist in the formulation of development programs for underdeveloped areas. I. The elements of the development problem and the data available are considered from the point of view of selecting the most significant structural relationships for a formal model. II. A nonlinear programming model is presented which is designed particularly to analyze the choice between self-sufficiency and international specialization and the resulting investment patterns under various types of restrictions. III. A method of solving the programming problem by a simple iterative procedure is suggested. It takes advantage of the structure of the matrix of activities and the limited number of primary factors involved. Convergence of the solution is demonstrated. IV. A development model for Southern Italy is constructed for purposes of illustration, based on studies of consumption, investment, and input structure and assumptions as to the remaining parameters. A solution for a hypothetical development program is given, showing the method of solution and the effect of variation in several of the parameters. V. The implications of the results for the solution of a more general model are considered. The relationship of the interindustry model to sector analyses and the

Reviews the book "Municipal Public Works Cost Accounting Manual," by Walter O. Harris.