Prosperity and Depression.pdf

Chap. 13 The Multiplier, Rigidities and Public Spending 479whole (as a true world formula would do) but only certain aspects orreactions to certain impulses (disturbances) from the outside.It is impossible here to go into the question of the actual degree ofextrapolation that is possible, in other words into the question of theconcrete explanatory value or validIty of Professor TINBERGENtSmodels. That would require not only an extensive discussion of hisstatistical data and techniques, but also of fundamental epistemologicalquestions. At .this point we could indicate only the logical nature ofthe ideal to which it aspires.§ 4. THE PROBLEM OF THE TURNING POINTSIf we were in possession of a perfectly endogenous theory of the kinddiscussed in the preceding pages, the problem of the turning pointswould present itself in a different light from that in which it wasviewed in Chapter I I of the present study. In fact, as ProfessorTINBERGEN argues, 1 no special explanation (theory) of the turningpoints is needed in that case. The assumed relationships togetherwith the concrete magnitude of the coefficients which constitute thetheory explain the cumulative process in either direction as well aswhy it comes to an end and reverses itself. If, for example, in thetable above we ask for an explanation of the downturn in income fromperiod 4 to period S, the only adequate answer can be a reference to,and a further elucidation of, the equations which constitute the model.Does it follow that there is no sense in the question for the reasonof the turning point, that there is no merit in a special turning pointanalysis-an analysis, that is to say, which tries to find out what happensduring the period in which a depression or revival begins? Thisdoes not follow by any means. First, it is always possible that a turningpoint may be brought about by a disturbance from outside, that is tosay by a factor which even the most ambitious and optimistic theoristcannot hope to include in his system. But, second, even if we disregardsuch hopelessly e~ogenous factors, there is no, or should be 'no, overlookingthe fact that complete sequence models of the kind discussedin the last section are still in the theoretical stage; they constitute a sort1 Review of Economic Studies, Vol. VII, 1940, ",ages 84-5.