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- Title
HICKS ON THE TRADE CYCLE.
- Authors
Duesenberry, James J.
- Abstract
This article presents information on trade cycle theory. It is opined that J.R. Hicks' contribution to trade cycle theory is ingeniously contrived and urbanely expressed. Some of the assumptions made by Hicks includes: real consumption expenditure is a function of real income in the recent past; autonomous investment, i.e., investment which is independent of output, rises through time at a more or less constant percentage rate; a substantial amount of investment is induced by changes in output; at any point in time there is a ceiling beyond which output cannot be increased; and the value of the accelerator is much smaller on the downswing than on the upswing. This is due to technical limitations on the possibility of disinvestment. Hicks' theory is an elegant one, but if one looks at it closely its validity seems doubtful. There are a number of weak points in the theoretical structure. In addition there is considerable doubt about the empirical validity of some of the fundamental assumptions.
- Subjects
BUSINESS cycles; ECONOMIC history; HICKS, John, 1904-1989; REAL income; INVESTMENTS; HYPOTHESIS
- Publication
Quarterly Journal of Economics, 1950, Vol 64, Issue 3, p464
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1884560