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"The Generation of the Accelerator Coefficient" [2004] ELECD 196; in Minsky, P. Hyman; Papadimitriou, B. Dimitri (eds), "Induced Investment and Business Cycles" (Edward Elgar Publishing, 2004)

Book Title: Induced Investment and Business Cycles

Editor(s): Minsky, P. Hyman; Papadimitriou, B. Dimitri

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843762164

Section: Chapter 3

Section Title: The Generation of the Accelerator Coefficient

Number of pages: 21

Extract:

3. The generation of the accelerator
coefficient
Even though the accelerator coefficient has been used in a considerable
number of business cycle models, there has been relatively little in the litera-
ture on the mechanism by which its value is determined. In this chapter
I wish to do the following: (a) examine statements by a number of authors
as to the mechanism by which the value of the accelerator is determined, and
(b) set out the relevant factors which enter into the determination of the
value of the accelerator coefficient. These relevant factors will form the basis
for the theoretical analysis of the behavior of business firms which follows.
The examination of the statements of the mechanism which determines the
value of the accelerator will not be comprehensive; rather it will be limited
to the remarks of a few authors.
As was mentioned earlier, at least three different concepts as to the nature
of the accelerator coefficient can be identified. These are:

1. The accelerator as a structural parameter.
2. The accelerator as a coefficient of induced investment.
3. The accelerator as a coefficient of realized investment.

Prior to taking up the rationalizations for the use of the accelerator
which have been put forward, it is necessary to clarify these differing
concepts.
If the aggregate accelerator coefficient is interpreted to be a structural
parameter, then it is derived from the production function. Typically in
such models the production function states that output is a constant times
the capital stock, for ...