MEMORANDUM
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I have just read the manuscript of your paper submitted to Econometrica. I am<br />
very much interested in your general idea of investigating the repercussions from one<br />
system to another which may be caused by changes in any one system in a closed<br />
circuit. So far as I understand, this is the essence of your approach. This idea, I think,<br />
is very promising, and I believe definitely worthwhile to follow up.<br />
The general way in which you have set up the problem is very good, but I am<br />
under a strong impression that the whole exposition could in places be very much<br />
improved upon, if it were condensed and perhaps accentuated a little more by<br />
indicating sharply the object followed within each of the sections. I should therefore<br />
recommend that you go over your manuscript once more with this in view.<br />
While reading the manuscript I have taken the liberty to suggest – with pencil<br />
marks – certain pages, which I think could be omitted without weakening your whole<br />
chain of argument. As a matter of fact, I think your main idea would stand out more<br />
clearly if this were done. In places I have also suggested the re-phrasing of certain<br />
sentences. (…)For the last part of the manuscript I have only made very few and very<br />
general suggestions.”<br />
So far it was sheer praise. Leontief’s paper clearly was appreciated by Frisch. The<br />
more technical comments that followed cannot really be appreciated without a conception<br />
of the model of Leontief’s paper, which apparently is lost. But an idea of Leontief’s model<br />
can be gleaned from the section of Leontief’s paper which was rewritten by Frisch after the<br />
paper was re-submitted. The model set out in that section was a highly structured general<br />
equilibrium system of n production functions, representing Leontief’s idea of vertical<br />
stages of production as a causal chain with. It was set out elegantly by Frisch as a circular<br />
causal chain (but the circularity was Frisch’s idea and Leontief didn’t like it). The Frisch<br />
version of (part of) Leontief’s system was as follows:<br />
x f ( x , b )<br />
n n n1<br />
n<br />
x f ( x , b )<br />
n1 n1 n1 n1<br />
- - - - - -<br />
x f ( x , b )<br />
x<br />
2 2 1 2<br />
f ( x , b )<br />
1 1 n 1<br />
The amount supplied of x<br />
i<br />
by sector i was a function fi( xi 1, bi<br />
) of the input xi<br />
1<br />
provided by sector i-1 and a parameter b i<br />
and so on in a circular chain. The problem posed<br />
by Leontief was to find the equilibrium solution in the x 's when one or more of the b 's<br />
shifted. Frisch’s letter continued as follows:<br />
93