Accelerator effect

The accelerator (Latin accelerator " accelerator " ) is in economics a code that expresses the extent to which a particular change in aggregate demand leads to a particular investment.

Overview

The accelerator process is in addition to the multiplier process is the most important mechanism by which there may be an over-reaction of economic stimulus. Increases for example, in the economic cycle, consumer demand by a certain amount, the companies are trying to increase its production capacity by investing in a certain extent, which is greater, the greater the increase in demand is down. This increases the demand for investment, so that the total demand, which is composed of consumer and investment demand, again increases, which in turn triggers a particular investment by accelerator.

However, the accelerator acts accordingly in the downturn. Together with the multiplier, it can under the Samuelson -Hicks model ( economic theoretical variant of the Harrod - Domar model: multiplier - accelerator model ) lead to economic fluctuations. Depending on the size of the accelerator and the multiplier, it may happen that the economic development

• Steadily growing
• Steadily shrinks
• Explosive swings ( around an equilibrium path oscillates with increasing amplitude )
• Damped oscillating ( So gradually the equilibrium path approaches )
• Or in the limiting case of a constant vibration.

History

The accelerator principle was described by the economist Albert Aftalion and Arthur Spiethoff.

Roy F. Harrod and Domar held Evsey D. explosive developments possible.

More Keynesian models delivered embossed Paul A. Samuelson and John Richard Hicks (multiplier - accelerator model ).

Investment function with accelerator (discrete time)

Delay by one period:

Instantaneously:

• I: investment
• Y: production
• V: accelerator

The new capital stock results here by adding them to the old capital stock at the beginning of the period, the investment in the current period:

Investment function with accelerator (continuous time)

Assuming discrete time periods to infinitesimally small increments of time over, then we obtain the continuous version of the Akzeleratorgleichung:

The growth of the capital stock is again equal to the investment:

Adjustment to desired capital stock

The accelerator principle can also be interpreted as an investment behavior, in which the companies are trying to the actual level of capital stock K to introduce them to a desired value. It is invested so much that the old capital plus any investment in the next period t 1 is equal to the desired capital stock. The desired capital stock is equal to a certain multiple of v of production Y to the company at the previous period are based:

Desired capital stock:

The new capital stock is derived from the ancient capital plus any investment:

Or

This corresponds to the Akzeleratorfunktion (without time delay).