Category: Harvard

Categories
Funny Business Harvard

Harvard. ‘Twas a Night in the Sixties. Poem by Martin Feldstein, 1980

1997 Feldstein
(Cambridge, MA - March 9, 1997) Faculty portrait of Professor Martin Feldstein. Staff Photo Mary Lee/Harvard University News Office.

 

‘Tis the Season to be Jolly so it is time to share this 39-year old economics parody composed, and one imagines performed, by Harvard Professor, Reagan economics adviser, and long-time president of the National Bureau of Economic Research, Martin Feldstein (1939-2019).

I have inserted first or last names between square brackets for the benefit of any non-economist or young economist (Boomer says, “You’re Welcome”) that has somehow landed on this page. 

__________________

‘Twas a Night in the Sixties
by Martin Feldstein

Cambridge, Massachusetts
December 1980

‘Twas a night in the sixties
And all through the land
Unemployment was falling
Inflation at hand.

The stock market was rising,
Without any care,
In hopes a Dow thousand
Soon would be there.

The Keynesians were snuggled
Secure in their Chairs,
While visions of multipliers
Allayed all their cares.

Paul [Samuelson] with his textbook
And Art [Okun] with his gap
Had settled their brains
For a long postwar nap.

When out in the land
There arose such a clatter,
A voice that was crying
That money could matter.

Away from their desks
They flew in a flash
To see who was claiming
Such power for cash.

They looked at their models
With equations precise,
That gave semblance of proof
To conclusions so nice.

When what to their wondering
Eyes should appear
But a miniature sleigh
With eight tiny reindeer

With a little old driver
Who was having such fun
They knew in a moment
It must be Milton [Friedman]

More numerous than eagles
His supporters they came
And he whistled and shouted
And called them by name.

First John [sic, Jean-Baptiste] Say and then [David] Hume
Then [Alfred] Marshall and [John Stuart] Mill,
Now [Karl] Brunner and [Alan] Meltzer
And Anna [Schwartz] and Phil [Cagan].

From the U. of Chicago
To Minneapolis-St. Paul
Then dash away! Dash away!
Dash away all!

As economic theories with which economists play
When they meet with an obstacle
Assume it away,

So off to the journals,
Their papers they flew,
With monetarist theorems,
Rational expectations too.

And even in Cambridge
Was heard the new truth,
The theorems and lemmas
Of each little proof.

The Keynesian thinkers
Were spinning around
When onto the scene,
Milton came with a bound.

He was dressed all in gold
From his head to his foot
And his ideas were polished
And ready to put.

“Velocity’s stable,
M1 and M2,
Which shows what the Fed
Shouldn’t be trying to do.”

“That curve by Phillips
It really is straight
And the cost of funds
Is the real interest rate.”

He wrote many a word,
And with evidence too.
At the NBER
His volumes they grew.

His ideas how simple.
He puts them so well.
It would be no wonder
When he got his Nobel.

A wink of his eye
And a nod of his head
Soon gave Keynesians to know
They had something to dread.

Then turning his talents
To the writing of prose
TV and best seller
He did with wife Rose.

Then he sprang to his sleigh
To his team gave a whistle
And away they all flew
Like the down of a thistle.

But I heard him exclaim
As he drove out of sight,
“Keep freedom for all,
and keep money tight.”

Source: Ancient, analogue copy found in Irwin Collier’s personal papers.

Image Source: Faculty portrait of Martin Feldstein in 1997 in The Harvard Gazette, June 13, 2019.

Categories
Exam Questions Harvard

Harvard. Final exam for location of economic activity. Usher, 1943

 

 The course announcement, enrollment figures, course description, and reading assignments for Abbott P. Usher’s Harvard half-course (first term, 1942-43), “The Location of Economic Activity. General Principles and Current Problems,” have been transcribed and posted earlier. 

This post provides a transcription of the final examination for the course.

________________

1942-43
HARVARD UNIVERSITY

ECONOMICS 65a1
[Final examination]

I
(About one hour)

  1. Write an essay on a topic based upon the work of the reading period, or on one of the following topics: the basing point system, the effect of parallelism in a railway network upon the rate structure.

II
Answer THREE questions.

  1. Under what circumstances may we describe a region as “maturely” settled? Within what limits may we expect to find variations in the density of population in maturely settled areas?
  2. Discuss the relative significance of surplus food, coal, and water power as in the localization of economic activity in the modern world.
  3. Answer a, or b.
    1. Within what limits can we defend the charging of higher gross rates, per ton mile or per passenger mile, for shorter than for longer distances?
    2. Discuss: “It is probably safe to say that the centralization of manufacturing industry has reached its limit. A reaction toward decentralization began when manufacturers located their mills in the suburbs of large cities in order to escape high city rents….”
      Weber, Growth of Cities, 1899.
  4. Describe the pattern of production in the steel industry of the United States, and explain the outstanding features of the pattern of localization.
  5. Describe the processes of extracting and refining copper, and discuss the influence of these procedures upon the location of the various types of enterprises in the copper industry.

 

Source: Harvard University Archives. Faculty of Arts and Sciences, Harvard University: Papers Printed for Mid-Year Examinations [in] History, Theology,…, Economics, …, Military Science, Naval Science. January, 1943. [Mid-Year Exams—Social Sciences, 1943. HUC 7000.55]

Image Source: Harvard Class Album, 1947.

Categories
Exam Questions Harvard Undergraduate

Harvard. Division Exams for the economics A.B., January 1917

 

The philosophy behind the use of division examinations for undergraduate history, government, and economics majors at Harvard was documented in an earlier post providing excerpts from relevant passages in annual reports of the President of Harvard College. This post adds to the growing stock of division exams from Harvard collected here at Economics in the Rear-view Mirror. Links to other exams are provided in the post along with the questions for four exams from the division examinations given in January 1917.

__________________

Background

A significant event of the year [1915-16] was the inauguration by the Division of History, Government, and Economics of its new examination of candidates for the Bachelor’s degree who have concentrated in the Division. This examination was devised “not in order to place an additional burden upon candidates for the A.B., but for the purpose of securing better correlation of the student’s work, encouraging better methods of study, and furnishing a more adequate test of real power and attainment.” In their preparation students have from the beginning of the Sophomore year special tutorial instruction. The examination embraces three tests: first, a general paper, with a large number of alternative questions, treating comprehensively the subjects of the Division; second, a special paper, covering a chosen specific field; and lastly, a supplementary oral examination which may relate to either the general or the special paper, but ordinarily bears upon the specific field. The results of the first examination, taken by a comparatively small group of men graduating in three years, are in no way conclusive. The members of the examining committee, however, think them distinctly encouraging. Twenty-four candidates appeared, of whom twenty-two passed and two failed. Their selection of questions from the general paper indicated breadth of preparation and their bearing at the oral examination showed more than a little clearness and independence of thought.

Source: Harvard University. Report of the President of Harvard College, 1915-16, pp.75-76.

__________________

April 1927 Division Examinations Not Included in Cole’s Volume of Exams

Handwritten note added to the Arthur H. Cole volume of collected division examinations, 1916-1927:

“This volume contains the January exams for 1916-17. The April 1917 exams are shelved separately”.

Source: Harvard University Archives. Divisional and general examinations, 1915-1975 (HUC 7000.18). Box 6, Bound Volume (stamped “Private Library Arthur H. Cole”) “Divisional Examinations 1916-1927”.

__________________

Other Harvard division exams transcribed and posted:

Division Examinations for the Degree of A.B.
Division of History, Government and Economics.

April/May 1916

History of Economic Thought, Public Finance, Labor 1931

Economic Theory 1939
Money and Government Finance 1939
Economic History (since 1750) 1939
Labor and Social Reform 1939

__________________

DIVISION OF HISTORY, GOVERNMENT AND ECONOMICS
FOR THE DEGREE OF A.B. DIVISION EXAMINATIONS
1916-17

DIVISION OF HISTORY, GOVERNMENT AND ECONOMICS
DIVISION GENERAL EXAMINATION
[January 6, 1917]

Part I

The treatment of one of the following questions will be regarded as equivalent to one-half of the examination and should therefore occupy one and one-half hours. Write on one question only.

  1. How does the federal form of government affect the life of a nation?
  2. Discuss the arguments for and against universal manhood suffrage.
  3. What influences have been exerted by the Catholic Church on political development since 1500?
  4. Sketch the life and work of two or three of the following: (a) Calvin, (b) Cavour, (c) Hildebrand, (d) Jefferson, (e) Kant, (f) Marx, (g) J. S. Mill, (h) Sir Thomas More, (i) Theodosius.
  5. What were the political and economic effects before 1750 of the discovery of America?
  6. How has the physiography of the states of Europe influenced (a) their economic development? (b) their political organization, and (c) their present problems?
  7. What has been the influence of France in the Western hemisphere?
  8. Discuss the merits and defects of lawyers as statesmen?
  9. Explain the reasons for the differences in British foreign and colonial policy in the eighteenth and nineteenth centuries.
  10. What have been the consequences of the guarantee of freedom of contract?
  11. Do periods of internal and external national greatness tend to coincide?
  12. Discuss sectionalism in the United States since the Civil War.

 

Part II

Three questions only from the following groups, A, B, and C, are to be answered, of which not more than two may be from one group.

A

  1. What were the chief features of the economic life of New England prior to the nineteenth century?
  2. Trace and explain the development of American agriculture since 1860.
  3. What have been the causes and results of the growth of cities?
  4. State the case for and against a federal income tax in the United States.
  5. In what ways and by what means does war affect government regulation of industry?
  6. Indicate points at which British economic policy has influenced German policy.

B

  1. Compare the characters and careers of Philip II of Spain, Louis XIV of France, and William II of Germany.
  2. How does the history of Holland and of Portugal illustrate the principle of balance of power?
  3. Should the French Revolution be regarded as the beginning or as the end of a period?
  4. “…With the governments who have declared their independence and maintained it, and whose independence we have, on great consideration and on just principles acknowledged, we could not view any interposition for the purpose of oppressing them, or controlling in any other manner their destiny, by any European power, in any other light than as the manifestation of an unfriendly disposition toward the United States.”
    From what document is this quotation taken? Give a brief account of the subsequent applications of this principle.
  5. In how far was the navy responsible for the victory of the North in the Civil War?
  6. Give an account of the political and economic relations of Germany and the United States, since the Declaration of American Independence.

C

  1. Compare the powers exercised by the President of the United States in 1800, in 1850, and in 1916.
  2. Why should Europe dominate Africa?
  3. What are the arguments for and against centralization and decentralization of political power?
  4. Should members of cabinets sit and vote in national legislative bodies?
  5. To what causes has the expansion of the United States since 1800 been due?
  6. Why has the status of Turkey been a matter of importance in international affairs?

*  *  *  *  *  *  *  *  *  *  *

DIVISION SPECIAL EXAMINATION
ECONOMIC THEORY
[January 10, 1917]

Answer six questions.

A

Take from this group at least two and not more than four.

  1. “The difference between producer’s and consumer’s goods is at bottom only a difference of degree.” Explain. What is the essential difference between these two classes of goods?
  2. Define and analyze: (a) consumer’s surplus; (b) producer’s surplus. Under what conditions of cost does producer’s surplus arise? How is monopoly profit to be distinguished from producer’s surplus? Illustrate throughout by diagram.
  3. What is meant by “overinvestment”? “overaccumulation”? How does over-investment in particular industries “bring its own remedy”? How does a tendency toward overaccumulation?
  4. “The exchanges between different countries are analogous to the exchanges between non-competing groups within a country.” Explain.
  5. Discuss the more important difficulties in the way of socialism.
  6. What methods of investigation may be employed in economic theory? Give an illustration of the use of one of these methods.

B

Take from this group at least one and not more than two.

  1. Sketch and criticize the attitude of the English and American courts during the nineteenth century toward collective bargaining by labor.
  2. Trace the development of interest theories.
  3. To what extent were changes in the tariff policy of the United States during the nineteenth century based upon changes in the prevailing opinion concerning free trade and protection?

C

Take from this group at least one and not more than two.

  1. Contrast the concepts of justice in taxation and justice in the distribution of wealth.
  2. What is the case for and against the Single Tax?
  3. To what extent and by what means can trade-unions influence (a) the wages paid in a given occupation? (b) the general level of wages?
  4. What has been the importance of the “American frontier” in the distribution of wealth in the United States?

*  *  *  *  *  *  *  *  *  *  *

DIVISION SPECIAL EXAMINATION
MONEY AND BANKING
[January 10, 1917]

Answer six questions.

A

Take from this group at least one and not more than two.

  1. Analyze the relation of the value of gold to its cost of production. In what measure, if at all, is the indicated relation peculiar to gold?
  2. Discuss index numbers of prices with reference to (a) the purposes they may serve; (b) the various methods of construction; (c) the best index numbers for wholesale prices in the United States.
  3. Below is a combined statement of the 12 Federal Reserve Banks at a recent date.
    Explain the several items of the statement, and comment upon the more significant conditions disclosed.

RESOURCES

 LIABILITIES

(all items in thousands of dollars)
Gold coin and certificates in vaults

$283,730

 Capital paid in

$55,711
Gold settlement fund

$174,801

 Government deposits

$26,319
Gold redemption fund

$1,404

 Member bank deposits

$637,072
Legal tender notes, silver, etc.

$17,974

 Federal Reserve notes—net

$14,296
5 per cent redemption fund

$470

 Federal Reserve bank notes

$1,028
Bills discounted for members

$20, 501

 Other liabilities

$634
Bills bought

$102,092
United States bonds

$39,427
One-year Treasury notes

$11,167
Municipal warrants

$22,166
Federal Reserve notes—net

$15,414
Due from other Federal Reserve Banks—net

$43,263
Other resources

$2,651

$735,060

$735,060

B

Take from this group at least one and not more than two.

  1. What were some of the forms of primitive money? What functions were performed by each form?
  2. Describe the economic cycle culminating in the crisis of 1837.
  3. Trace and explain the inflationist movement in the United States from 1865 to 1900.
  4. What connections have existed since 1830 between the financial administration of the Federal Government and banks in the United States?

C

Take from this group at least two and not more than four.

  1. Would universal bimetallism conduce to a stable market ratio between gold and silver? to a stable price level? What have been the chief obstacles to universal bimetallism? Are these obstacles increasing or decreasing?
  2. When prices are rising how are the following affected: (a) farmers; (b) factor operatives; (c) manufacturers; (d) stockholders; (e) owners of gold mines?
  3. Give a detailed account of silver since 1890.
  4. Wherein is the Federal Reserve System like the banking system recommended by the National Monetary Commission? Wherein is it different? Discuss the differences.
  5. Trace and explain the course of foreign exchange rates since the beginning of the European War.
  6. What is meant by “agricultural credit”? Describe briefly and criticize the existing facilities for agricultural credit in the United States.

    *  *  *  *  *  *  *  *  *  *  *

DIVISION SPECIAL EXAMINATION
CORPORATE ORGANIZATION, INCLUDING RAILROADS
[January 10, 1917]

Answer six questions.

A

Take from this group at least one and not more than two.

  1. Define “monopoly.” In what ways, if at all, is monopoly price affected by (a) cost of production per unit? (b) potential competition? (c) an elastic demand for the product? (d) the existence of satisfactory substitutes for the product?
  2. What official statistics throw light upon industrial organization in the United States? Criticise the available statistics of this subject.
  3. Describe the general features of the uniform accounting system now prescribed for railroads by the Interstate Commerce Commission. Why was the Commission given power to prescribe and supervise such a uniform accounting system?
  4. Enumerate the principal sources of railway statistics at the present time, and show the content, importance, and deficiencies (if any) of each.

B

Take from this group at least one and not more than two.

  1. Trace any connections between the corporate form of organization and the later stages of the Industrial Revolution.
  2. Sketch the history of the Sherman Anti-Trust Law and its enforcement.
  3. Give a brief account of the Granger movement.
  4. “Railways have been the most important agents in increasing the disparities of wealth in modern times.” Explain.

C

Take from this group at least two and not more than four.

  1. If a corporation regularly earns 5 per cent on all its outstanding securities, can it be said to be overcapitalized? What constitutes overcapitalization? How, if at all, should the law attempt to deal with overcapitalization?
  2. Analyze the present policy of the Federal Government in its regulation of industrial combinations in the United States.
  3. What connections exist between banks and industrial combinations in the United States? Contrast the situation here with that in France.
  4. In railroading in the United States, what is the significance of the following: (a) large plant; (b) joint cost; (c) physical valuation; (d) competition of water routes; (e) division of powers between state and Federal governments?
  5. Discuss the forms and significance of discriminations in railway rate-making. Which of the discriminations, if any, tend to persist under government ownership?
  6. What provisions should be made for the settlement of wage disputes on interstate railroads in the United States?

*  *  *  *  *  *  *  *  *  *  *

DIVISION SPECIAL EXAMINATIONS
[not transcribed for this post]

MODERN HISTORY SINCE 1789, INCLUDING AMERICAN HISTORY
[January 10, 1917]

AMERICAN GOVERNMENT
[January 10, 1917]

 

Source: Harvard University Archives. Divisional and general examinations, 1915-1975 (HUC 7000.18). Box 6, Bound Volume (stamped “Private Library Arthur H. Cole”) “Divisional Examinations 1916-1927”.

Image Source:  Harry Elkins Widener Memorial Library. Harvard Class Album 1920, p. 65.

 

Categories
Agricultural Economics Harvard Problem Sets

Harvard. Problem set from agricultural economics. Carver, ca. 1904

 

The problem set transcribed below was found in the Harvard University archives collection of syllabi, course outlines and reading lists in economics, 1895-2003; box 1. It was (mis-)filed in the folder “Economics, 1904-05”.  The problem set is clearly identified as belonging to Economics 23. This semester course, “The Economics of Agriculture, with special reference to American conditions”, was taught by Professor Thomas Nixon Carver, but according to the annual report of the president of Harvard College, the course was not offered in 1904-05 though it was indeed offered during the immediately preceding academic year. I have assumed that the problem set was printed for the second term of the academic year 1903-1904. This is consistent with the library time stamp on the problem set (March 7, 1905), i.e. it cannot have come from later years.

From Carver’s autobiography, Recollections of an Unplanned Life, we know that his textbook, Principles of Rural Economics (1911) was based upon this course. For a long-form course reading list, one can consult the bibliography, pp. xi-xviii, in the textbook.

Previously transcribed and posted artifacts from Carver’s agricultural economics course:

Course enrollment and final exam for 1914-15.

Course syllabus for 1917.

Course examination from 1918.

________________________

Trace of the 1904 problem set found in Carver’s 1911 textbook

Note:  Column (Field A) is Table A p. 180; Column (Field C) is Table B p. 181

Source: Thomas Nixon Carver, Principles of Rural Economics, (1911).

________________________

From Thomas Nixon Carver’s Autobiography.

I have mentioned the three strenuous years 1900 to 1903, and that I served the three following years, 1903-1906, as chairman of the Division of History, Government, and Economics. Before leaving for my sabbatical year abroad in 1906, I had resigned as chairman of the Division. In the fall of 1907 I was back in Cambridge with no administrative responsibilities and ready to settle down to teaching and writing. By this time I had come to be recognized as one of the pioneers in this country in the field of agricultural economics. One of the difficulties in the teaching of that subject was the lack of written material. Textbooks were needed and I began to plan one of my own. Before I got well started Professor Liberty Hyde Bailey of Cornell asked me to write a brief historical sketch of American agriculture for his Cyclopedia of American Agriculture which he was preparing. I under took this, not realizing how much work it would require. The material, such as there was, was widely scattered and there was no guide to indicate where to look for it. However, with much toil and sweat I finished the chapter.

Then came a request for an account of the introduction of various crops and farm animals into this country. That was a still harder job but I finished it in time. I was able, later, to use a part of the material in my book, “Principles of Rural Economics,” which Ginn & Company published in 1911.

This book did a great deal to popularize agricultural economics in this country. Henry C. Taylor’s “Introduction to the Study of Agricultural Economics” had preceded it, but, while an excellent introduction, had not made much of an appeal outside the agricultural colleges. My “Principles” sold well. As I remember it, 40,000 copies were sold the first year, and it was favorably reviewed in a number of journals…

…The course on rural economics appealed to a limited number of students, but continued to be elected by enough to make a fair-sized class…

Source: Thomas Nixon Carver. Recollections of an Unplanned Life, p. 171.

________________________

Course description

[Economics] 23 2hf. The Economics of Agriculture, with special reference to American conditions. Half-course (second half-year). Tu., Th., at 1.30. Professor Carver.

Omitted in 1904-05.

            A study of the relation of agriculture to the whole industrial system, the relative importance of rural and urban economics, the conditions of rural life in different parts of the United States, the forms of land tenure and methods of rent payment, the comparative merits of large and small holdings, the status and wages of farm labor, the influence of farm machinery, farmers’ organizations, the marketing and distribution of farm products, agricultural credit, the economic aspects of public roads, irrigation, forestry, etc., the policy of the government toward agriculture, and the probable future of American agriculture.

The course will be conducted by means of lectures, discussions and reports, with some special investigations of local conditions.

 

Source: Harvard University. Faculty of Arts and Sciences. Division of History and Political Science comprising the Departments of History and Government and Economics, 1904-05. University Publications, New Series, No. 129 (May 16, 1904), p. 47.

________________________

Course enrollment, 1903-04

[Economics] 23 2hf. Professor Carver.—The Economics of Agriculture, with special reference to American conditions.

Total 99: 5 Graduates, 32 Seniors, 28 Juniors, 17 Sophomores, 2 Freshmen, 15 Others.

Source: Harvard University. Report of the President of Harvard College, 1903-04, p. 67.

*  *  *  *  *  *  *  *

Note:  The course was indeed not offered in 1904-05, though course enrollments were reported for Carver’s courses Economic 3 “Principles of Sociology. Theories of Social Progress”; Economics 13 “Methods of Economic Investigation”; Economics 14a “The Distribution of Wealth”; Economics 14b “Methods of Social Reform. Socialism, Communism, the Single Tax, etc.”

Source: Harvard University. Report of the President of Harvard College, 1904-05, pp. 74 ff.

*  *  *  *  *  *  *  *

Course enrollment, 1905-06

[Economics] 23 2hf. Professor Carver.—The Economics of Agriculture, with special reference to American conditions.

Total 42: 4 Graduates, 10 Seniors, 11 Juniors, 14 Sophomores, 1 Freshman, 2 Others.

Source: Harvard University. Report of the President of Harvard College, 1905-06, p. 73.

________________________

Time stamp: “Harvard College Library, MAR 7, 1905”

HARVARD UNIVERSITY
ECONOMICS 23

Amount of corn grown with varying amounts of labor on a given amount of land.

Number of days’ labor of a man and team with the appropriate tools.

 Product, in bushels, on each of four fields of ten acres each.
Field A. Field B. Field C.

Field D.

5

 50 45 40 35
10 150 140 130

120

15

 270 255 240 255 [sic]
20 380 360 300

280

25

 450 425 350 325
30 510 480 390

360

35

 560 520 420 385
40 600 550 440

400

45

 630 570 450 410
50 650 575 455

415

 

The following problems are based on the above table:—

Problem 1. Assuming that the labor of a man and team, with the appropriate tools, costs a farmer five dollars a day, and that corn is worth forty cents a bushel, how many days of such labor could he most profitably devote to the cultivation of each of the four fields?

Problem 2. Assuming that corn is worth only 33 1/3 cents a bushel, how much labor, etc., could he most profitably apply to the cultivation of each field,—the cost of labor, etc., remaining the same?

Problem 3. Assuming that a farmer has only 200 days’ labor to use, but that he can have rent free an indefinite amount of land of the grade of Field A, how much land could he most profitably use? How much land of the grade of Field C could he most profitably use?

Problem 4. How much land of each grade could he most profitably use if he had to pay five dollars an acre rent, corn being worth fifty cents a bushel, other conditions the same as in Problem 3?

Problem 5. Assuming that the two fields A and C are owned by the same farmer, and that he has but 20 days’ labor which he can devote to their cultivation, how could these 20 days be most profitably distributed among them? How could 25 days be most profitably distributed? 35 days? 50 days? 60 days? 70 days? 90 days?

 

Source: Harvard University Archives. Syllabi, course outlines and reading lists in economics, 1895-2003. Box 1. Folder “Economics, 1904-05”.

Image Source: Thomas Nixon Carver in Harvard Class Album 1906.

Categories
Exam Questions Harvard

Harvard. General Examinations in Micro- and Macroeconomic Theory, Fall 1992

 

 

The following general examinations for microeconomic and macroeconomic theory (Fall 1992) have been transcribed from a collection of general exams at Harvard from the 1990s provided to Economics in the Rear-view Mirror by Abigail Waggoner Wozniak (Harvard economics Ph.D., 2005). Abigail Wozniak was an associate professor of economics at Notre Dame before being appointed a senior research economist and the first director of the Federal Reserve Bank of Minneapolis’ Opportunity & Inclusive Growth Institute. Economics in the Rear-view Mirror is most grateful for her generosity in sharing this valuable material.

The “Wozniak collection” is over 90 pages long, so it will take some time for all the exams to get transcribed.

Transcriptions are available for:

Spring 1991 General Examinations in Microeconomic Theory and Macroeconomic Theory.

___________________

HARVARD UNIVERSITY
DEPARTMENT OF ECONOMICS

GENERAL EXAMINATION IN MICROECONOMIC THEORY
FALL 1992

Instructions:

  1. You have FOUR
  2. Answer a total of FOUR questions subject to the following constraint:
    There are four sections (I, II, III, IV). You must answer ONE question from each section.
  3. Please use a separate blue book for each question.
  4. Please put only your EXAM NUMBER on the blue book.

 

PART I

  1. Suppose that the consumption set is X=\left\{ x\in \mathbb{R}_{+}^{2}:{{x}_{1}}+{{x}_{2}}\ge 1 \right\} and the utility function is u(x) = x2.
    1. Represent graphically the consumption set and the indifference map.
    2. State and show that the locally cheaper consumption test for demand fails at the price/wealth combination (p, w) = (1, 1, 1).
    3. Show that market demand is not continuous at the above price/wealth combination. Interpret economically.
  2. An individual has Bernoulli utility indicator u and initial wealth w. Let lottery L offer a payoff of G with probability q and a payoff of B with probability 1 – q.
    1. If the individual owns the lottery, what is the minimum price s/he would sell it for?
    2. If s/he does not own it. What is the maximum price s/he would be willing to pay for it?
    3. Are buying and selling prices equal? Give an economic interpretation for your answer. Find conditions on the parameters of the problem under which buying and selling prices are equal.
    4. Let G = 10, B = 5, w = 0 and u(x) = x0.5. Compute the buying and selling prices for this lottery and this utility indicator.

 

PART II

Consider a market with three identical firms. The three firms set quantities as strategies and do so simultaneously. Each firm has marginal cost c, and market price is

p=1-\sum\limits_{i=1}^{3}{{{q}_{i}}}, where qi is firm i’s quantity.

  1. What are the Cournot equilibrium quantities and prices in this model?
  2. Suppose that firms 1 and 2 consider merging to form a single firm, which would have access to the two firms’ technologies. The merged firm, if it forms, would compete as a Cournot duopolist with firm 3. Assuming that the owners of firms 1 and 2 split the merged firm’s profit equally, would they find such a merger advantageous?
  3. Now suppose that firm 1 sets its quantity (as a Stackelberg leader) first and that firms 2 and 3 then follow and set quantities simultaneously. The model is otherwise the same as before. Suppose that firms 1 and 2 contemplate forming a merged firm that would act as a Stackelberg leader vis a vis firm 3. Will the merged firm’s profit be higher or lower than the sum of firm 1’s and 2’s profits in the pre-merger equilibrium? The question should be answered without making any mathematical computations.

 

PART III

Consider the country of Ec, a country with a small open economy. Ec’s economy produces two outputs, x and y, from two immobile factors, capital (K) and labor (L). The prices of x and y, px and py, are determined on the world market and are not affected by anything that happens in Ec. The aggregate production function in Ec for x is fx(K,L) and that for y is fy(K,L). Both of these functions are homogeneous of degree one in (K,L), continuous, differentiable, and have strictly convex upper contour sets. Let the input price of K  in Ec be r and that for L be w(these are prices in Ec, not world prices).

  1. Display the set of efficient production plans in an Edgeworth Box. Argue that the contract curve must lie either all above, all below, or be coincident with the diagonal in the interior of this box.

Now assume that production of x is more capital intensive than is production of y in the sense that for any given ratio of input prices, r/w, the cost minimizing way to produce any given amount of output involves a strictly larger capital-labor ratio, K/L, in the production of x than in the production of y.

  1. What can you say about the shape of the contract curve now? How do the slopes of the isoquants of the two production processes vary at various points on the contract curve?

Now assume that Ec has a perfectly competitive economy.

  1. Show that there is a unique equilibrium input price ratio r/w.
  2. Prove that if the world price of the capital intensive good (px) rises, then the equilibrium input price ratio, r/w, increases.
  3. Prove that if the endowment of labor in Ec increases, the output of good y increases and output of good x

 

PART IV

  1. How is it that, even in a world of linear technologies, different theories of growth and distribution lead to different theories of value, i.e., different theories of relative prices? Doesn’t this violate the non-substitution theorem, which shows that, for a given cost of capital, the technology which minimizes costs will be chosen irrespective of demand? Is the existence of different theories of value compatible with the idea that competition eliminates any difference between price and cost of production? How does utility maximization enter into neoclassical and non-neoclassical theories of value?
  2. Overheard in the corridors of Littauer:
    “I took the best road home yesterday.”
    “How do you know that?”
    “If there had been a better one I would have taken it.”
    Analyze the above dialogue from the point of view of both partisans and critics of revealed preference theory.

 

Source: Department of Economics, Harvard University. Past General Exams Spring 1991-Spring 1999, pp. 72-77. Copy provided to Economics in the Rear-view Mirror by Abigail Wozniak.

___________________

HARVARD UNIVERSITY
DEPARTMENT OF ECONOMICS

GENERAL EXAMINATION IN MACROECONOMIC THEORY
FALL 1992

Instructions:

  1. You have FOUR
  2. Answer a total of SIX questions subject to the following constraint:
    There are four sections (I, II, III, IV). You must answer ONE question from each section.
  3. Please use a separate blue book for each question.
  4. Please put only your EXAM NUMBER on the blue book.

 

PART I

  1. Answer the question, “Does money affect output?” Support your answer with both theoretical arguments and empirical evidence. Discuss the strengths and weaknesses of this evidence. Finally, include a detailed discussion of one theory that supports your position.
  2. The response among pundits to the recent reduction in German interest rates has been overwhelmingly positive. Evaluate this response in light of the Mundell-Flemming model. How does foreign monetary policy affect domestic output in the model? What other channel might American commentators have in mind. Speculate about the cause of this difference and give an opinion as to who is correct.

 

PART II

Problem 1

Consider the following dynamic version of the Mundell-Fleming model:

{{\dot{e}}}/{e}\;={{i}^{*}}-i

i=\alpha y-\beta m

\dot{y}=\gamma \left( d-y \right)

d=\lambda y-\theta e+g

where

e is the exchange rate (measured so that an appreciation of the domestic currency is an increase in e),
i* is the (exogenous) world interest rate,
i is the domestic interest rate,
y is output,
m is (exogenous) real money balances,
d is demand,
g is a measure of (exogenous) fiscal policy,
and \alpha >0,\,\,\beta >0,\,\,\gamma >0,\,\,0<\lambda <1,\,\,\theta >0.

  1. Give an interpretation of each equation.
  2. Write the model using two variables and two laws of motion. Identify the state (non-jumping) variable and the costate (jumping) variable.
  3. Draw the phase diagram, including the steady-state conditions, the implied[?] dynamics, and the saddle-point stable path.
  4. Describe the effects of a sudden, permanent increase in g. Compare the results to the standard (static) Mundell-Fleming model.
  5. Describe the effects of a sudden, permanent increase in Compare the results to the standard (static) Mundell-Fleming model.

 

Problem 2

Suppose that the representative consumer maximizes the following intertemporal utility function:

{{E}_{t}}\sum\limits_{j=0}^{\infty }{{{\left( 1+\rho  \right)}^{j}}U\left( {{C}_{t+j}},{{G}_{t+j}} \right)}

where C is consumption,

G is (exogenous) government spending,

\rho is the subjective rate of discount,

The consumer has random earnings, and she can borrow and lend at the constant real interest rate r.

  1. What is the consumer’s intertemporal first-order condition? Explain.
  2. In this problem, what variable follows a random walk (that is a martingale)? What variable doesn’t? Explain.
  3. Suppose that government spending follows a predictable pattern: in particular, suppose that (for some political reason) G fluctuates as a sine wave. What is the implied pattern of consumption?
  4. Describe the equity-premium puzzle.
  5. Suppose now that government spending is countercyclical (that is, the government increases G when the economy goes into a recession). How might this model help resolve the equity-premium puzzle? What condition would you need for the utility function U(.)?

 

PART III

  1. What implications for the conduct of monetary policy follow from the fact that many of the familiar variables that economists have urged central banks to adopt as their operating targets—for example, prices, or real interest rates, or measures of money other than the monetary base—are inherently endogenous in the sense that a central bank typically cannot set any of these variables directly via its open market operations? Use a specific model of your choice to illustrate what role a variable like the price level or the real interest rate, or a measure of money other than the monetary base, can plausibly play in the monetary policymaking process even when it is clearly endogenous.
  2. “Whether or not debt-financed government spending ‘crowds out’ private capital formation depends on whether or not the economy’s private resources are already fully employed. At less than full employment, deficit spending will crowd out investment even if it raises output (which it may or may not do). By contrast, the mechanisms that cause this decline in investment at less than full employment are not operative when the economy is fully employed.” Do you agree or disagree with this statement? Explain your reasoning as explicitly as possible.

 

PART IV

  1. Suppose that the government wishes to minimize the present value of costs, zt, which are given for period t by {{z}_{t}}=a\cdot {{\left( {{\pi }_{t}} \right)}^{2}}-b\cdot \left( {{\pi }_{t}}-\pi _{t}^{e} \right)+\left( {c}/{2}\; \right){{\left( {{\pi }_{t}}-\pi _{t}^{e} \right)}^{2}}
    where a, b, c, > 0 are constants, {{\pi }_{t}} is the inflation rate for period t, and \pi _{t}^{e} is the inflation rate that people expected at the start of period t.

    1. If the government takes \pi _{t}^{e} as given, then what value of {{\pi }_{t}} minimizes the cost zt for period t?
    2. If the government acts as in part I., and everyone knows it, then what is the full equilibrium under conditions of rational expectations? Explain the costs that are borne in this equilibrium. How are they affected by an increase in the parameter a, which measures the cost of inflation? Explain the results.
    3. If the government can commit to an inflation rate for period t, then what rate should it commit to? Explain how the costs in this situation compare with those from the equilibrium in part 2.
    4. Can the equilibrium described under 2. still apply if the government takes account of costs in future periods as well as for period t?
  2. Consider the neoclassical growth model for a closed economy of Solow, Cass, Koopmans, et al.
    1. If we think of all countries as closed, does this model imply convergence in the sense that poor countries tend to grow faster per capita than rich countries? Discuss in your answer the distinction between absolute convergence—where the poor grow faster than the rich—and conditional convergence—where a poor country grows faster for given values of some exogenous variables.
    2. How do the rates of convergence in this model relate in a general way to the diminishing returns to capital and to the behavior of the saving rate? How would the rate of convergence be affected by allowing for some capital mobility across countries?
    3. If poor countries tend to grow faster per capita than rich countries does it follow that the dispersion of per capita incomes across countries will tend to narrow over time?

 

Source: Department of Economics, Harvard University. Past General Exams Spring 1991-Spring 1999, pp. 78-83. Copy provided to Economics in the Rear-view Mirror by Abigail Wozniak.

Image Source: Harvard Class Album 1946.

Categories
Economic History Exam Questions Harvard Suggested Reading Syllabus

Harvard. European Economic History from the Industrial Revolution. Gay, 1934

 

 

A brief biography of Harvard economic historian and first Dean of the Harvard Business School, Edwin Francis Gay (1867-1946) is found in the earlier post for his course “Recent Economic History” that was also taught at Harvard in the 1934-35 academic year. Below we have the course announcement, enrollment figures, reading list, and final exam for the course on European Economic History from the Industrial Revolution.

______________________________

Course Announcement

Economics 2a 1hf. European Economic History from the Industrial Revolution

Half-course (first half-year). Tu., Th., and (at the pleasure of the instructor) Sat., at 9. Professor Gay.

Source: Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences During 1934-35, second edition. Published in Official Register of Harvard University, Vol. XXXI, No. 38 (September 20, 1934), p. 125.

______________________________

Course Enrollment

[Economics] 2a 1hf. Professor Gay.—European Economic History since the Industrial Revolution.

Total 50:  3 Graduates, 21 Seniors, 17 Juniors, 8 Sophomores, 1 Other.

Source: Harvard University. Report of the President of Harvard College, 1934-35, p. 81.

______________________________

Assigned and Suggested Readings

ECONOMICS 2a
[pencil insert: 1934-5]

European Economic History from the Industrial Revolution

Hour Test on November 13 [Pencil insert: Extended to Nov. 15] will cover Groups I and II.

I. SOCIAL THOUGHT AND PROGRESS

A. V. Dicey—Law and Public Opinion in England (1908). Lectures 4-7 (Pages 62-258)

J. M. Keynes—The End of Laissez Faire. (1926)

G. Wallas—Life of Francis Place (1918). Chapters 1, 2, 3, 6, 7, 8 (pages 1-92, 157-240)

II. TRANSPORTATION

E. A. Pratt—A History of Inland Transport and Communication in England (1912). Chapters 8-22 (pages 51-311)

J. H. Clapham—Economic Development of France and Germany (1921). Chapters 5, 7, 12 (Pages 104-120, 140-157, 339-375)

III. AGRICULTURE

Lord Ernle—English Farming, Past and Present (3d edition, 1922). Chapters 17, 18

J. H. Clapham—Economic Development of France and Germany (1921). Chapter 9 (pages 195-231)

C. L. Christensen—Agricultural Cooperation in Denmark. Pages 9-54, 81-87

IV. TARIFF POLICY

P. Ashley—Modern Tariff History (1920). Part 1, Part 3 (pages 3-128, 269-355)

J. Morley—Life of Richard Cobden (1881). Chapters 6, 7, 10, 11, 13, 16 (pages 140-172, 209-247, 290-307, 355-389)

V. BANKING

A. Andreades—History of the Bank of England (1909). Vol. 1, part 4; Vol. 2, Introductory chapter and Part 1 (pages 161-294)

H. Feis—Europe The World’s Banker, 1870-1914 (1930). Part I; Part II; Part III, Chapters 12, 13 (pages 3-190-258-313)

VI. READING PERIOD ASSIGNMENT

Choose ONE of the following groups:

INDUSTRIAL DEVELOPMENT

P. Mantoux—The Industrial Revolution in the Eighteenth Century (English translation, 1928)

Part I, Chapter 2
Part II, Chapters 1, 2, 3
Part III, Chapters 1, 2, 3, 4
(pages 93-139-193-317, 349-489)

J. H. Clapham—Economic Development of France and German. Chapters 3, 4 (pages 53-103)

LABOR

S. & B. Webb—History of Trade Unionism (1920 edition). Chapters (in part) 2, 3, 4, 5, 7, 9, 10, 11 (pages 64-112, 153-179, 180-204, 249-298, 358-421, 472-546, 594-611, 634-676, 677-704)

Cambridge Modern History—Volume 12—Chapter 23—Social Movements (by Webb) (pages 730-765

BRITISH INDUSTRY AND CAPITAL

A. Siegfried—England’s Crisis (1933 edition)

L. H. Jenks—The Migration of British Capital to 1875 (1927). Chapters 1, 5, 7, 11. Pages 1-24, 126-157, 193-232, 326-336)

*  *  *  *  *  *  *  *  *

SUGGESTIONS FOR FURTHER READING—NOT ASSIGNED

A. Birnie—Economic History of Europe 1760-1930 (1930)

C. Day—Economic Development in Modern Europe (1933)

J. H. Clapham—An Economic History of Modern Britain—2 vol. 1926-32 [3 vols. 1926-1938]

L. Domeratzsky—The International Cartel Movement (1928)

R. J. S. Hoffman—Great Britain and the German Trade Rivalry 1875-1914 (1933)

P Fitzgerald—Industrial Combination in England (1927)

L. C .A. Knowles—The Economic Development of the British Overseas Empire, 2 vols. (1924-1930)

F. L. Nussbaum—A History of the Economic Institutions of Modern Europe (1933)

H. M. Robertson—Aspects of the Rise of Economic Individualism (1933)

L. C .A. Knowles—Economic Development in the Nineteenth Century (1932)

 

Source: Harvard University Archives. Syllabi, course outlines and reading lists in economics, 1895-2003. Box 2, Folder “Economics 1934-1935”

______________________________

1934-35
HARVARD UNIVERSITY

ECONOMICS 2a1
[Final. 1935.]

Comment briefly on THREE of the statements in part I, and discuss more fully TWO of the questions in Part II.

Part I

  1. “During the period 1785-1802 there was an increase rather than a decrease of the yeomen proper in England.”
    “The Industrial Revolution was responsible for a decrease in the number of yeomen.”
  2. “The solution for the problem of agricultural distress is to be found, as the example of Denmark clearly shows, not in protective tariffs but in coöperative organization.”
  3. “The Bank was right in 1811 in rejecting the main recommendations of the Bullion Committee and in thereby refusing to follow the counsels of doctrinaires.”
  4. “The Trade Union of today is a direct descendant of the old Gild.”
  5. “The fact that the landlords supported the Factory Acts and that the manufacturers agitated for the repeal of the Corn Laws indicates that both of these powerful antagonists desired the welfare of the working class and that this class, as yet unenfranchised, wielded great political power.”

Part II

  1. “It was the increase of population which rendered necessary the Industrial Revolution.” (Lewinski.)
    “The cotton industry by its demand for the labor of women and children was chiefly responsible for the great increase of population in the towns during the generation and a half preceding the Reform Bill.”
    Comment and give your own view concerning the movement of population in Great Britain and its relation to the Industrial Revolution.
  2. “The community as a whole benefits more by falling than by rising prices.” (Layton.)
    Is this statement supported by the experience of England in the nineteenth century?
  3. Show the chief difference (giving reasons therefor) between France and Germany in railroad development and control.
  4. “The manifold connections and activities of British commerce and finance achieved for Great Britain in their freedom a vigorous expansion.” (Feis) Explain and exemplify.
  5. Summarize concisely:
    1. Bullion Report.
    2. New Unionism.
    3. Cobden Chevalier Treaty.
    4. Méline Tariff.
    5. Bank Act of 1844.
    6. Taff Vale Case.

Source: Harvard University Archives. Mid-year examinations, 1852-1943. Box 12. Volume: Examination Papers. Mid-Years, 1934-35.

Image Source: Edwin Francis Gay in Harvard Class Album 1934.

Categories
Exam Questions Harvard

Harvard. Final examination for graduate mathematical economics. Goodwin, 1950-51

 

 

 

The reading list for the one-term course Economics 204b. Mathematical Economics, taught by Richard Goodwin during the first term of 1948-49 was posted earlier.

This same course number, Economics 204b, was later assigned to a Goodwin’s seminar in mathematical economics in 1950-51 (that covered “General interdependence systems: in particular, Leontief linear systems”), so we can assume that much of the reading list for his course Economics 204a in 1950-51  would have been very similar to the earlier list linked above. In any event, here are the exam questions for the 1950-51 course.

_____________________

Course Description

Economics 204a. Mathematical Economics

Half-course (fall term). Tu., Th., 2:30-4. Assistant Professor Goodwin.

Micro-and macro-dynamical economic systems.

Prerequisites: one course in economics and one in college mathematics. Properly qualified undergraduates will be admitted to the course.

Source: Final Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences During 1950-51. Published in Official Register of Harvard University, Vol. XLVII, No. 23 (September, 1950), p. 83.

_____________________

HARVARD UNIVERSITY
ECONOMICS 204a
Final. January, 1951

Please use right hand side of page only, leaving the left hand side for scratchwork.

I
Required hour question.

  1. Write an essay on the role of stability in economic science. Include some discussion of various definitions of it, how to measure it, and its use by Walras and by Marshall. Would you be inclined to accept as valid the following type of proposition: we may assume that all or most markets have stable equilibria, for “the plausibility of such a stability hypothesis is suggested by the consideration that positions of unstable equilibrium, even if they exist, are transient, nonpersistent states, and hence on the crudest probability calculation would be observed less frequently than stable states” (Samuelson)?

II
Take any TWO questions, allowing about 40 minutes for each.

  1. State concisely the economic assumptions and derivation of any one macrodynamic model of an inventory cycle. In terms of the model discuss the factors governing the period of its cycle.
  2. Develop briefly a simply macrodynamic model based on ‘fixed’ capital theory. Indicate the important non-linearities and give a graphical discussion of the nature of the solutions and their limit cycle. What are the principal characteristics of the system’s behavior?
  3. Two different economic situations are described by the somewhat similar equations:
    1. \ddot{x}+.12\dot{x}+2.3x=10;
    2. x\left( t+2 \right)+.12x\left( t+1 \right)+2.3x\left( t \right)=10.
      Compare and contrast the behavior implied in the two cases.

 

III
Take any TWO questions, allowing about 20 minutes for each.

  1. If the multiplier mechanism is represented by
    {1}/{v}\;\dot{y}+\left( 1-\alpha \right)y=i\left( t \right)+H ,
    and if
    i\left( t \right)=\kappa \dot{y}+I\cos \omega t,
    Obtain the complete solution for y.
  2. Given a Marshallian type market, specified by
    \begin{array}{l}{{p}_{d}}={{p}_{d}}\left( q \right),\\{{p}_{s}}={{p}_{s}}\left( q \right),\\\text{and}\\\dot{q}=f\left( {{p}_{d}}-{{p}_{x}} \right),\end{array}

    1. State the meaning and use of its phase line, \psi \left( q \right);
    2. Derive the relationship between the slope of \psi \left( q \right) and the slopes of the supply, the demand, and the reaction curves;
    3. Show what conditions on the slopes of the other curves are implied by a stable equilibrium point.
    4. If all curves are linear for small variations, show how the time constant, \tau , depends on the slopes of the supply, the demand, and the reaction curves.
    5. With the help of graphs, discuss the various possible behavior types of a ‘cob-web’ market with general, non-linear supply and demand curves. Explain briefly in words the meaning of your results.

Source:  Harvard University Archives. Final examinations, 1853-2001. Box 17, Bound volume: Papers Printed for Final Examinations. History, History of Religions, …, Economics, …, Military Science, Naval Science. January, 1951.

Image: Harvard Class Album 1951.

Categories
Exam Questions Harvard Suggested Reading Syllabus

Harvard. Economics of Mobilization and War. Syllabus, exam questions. Harris, 1952

 

Just as the Harvard economics department saw it fit to offer a course on the economic aspects of war at the start of the Second World War, there was a course on the economics of mobilization and war at the time of the Korean War taught by Seymour Harris, who had organized the earlier departmental course on war economics in 1940. Enrollment numbers for courses taught during the academic year 1951-52 were not included in the Harvard College Report of the President, so I am unable to include that information in this post. However, we have the course catalogue description, course reading list, and the final examination as transcribed below.

________________

Course Description

Economics 120. Economics of Mobilization and War

Half-course (spring term). Mon., Wed., and (at the pleasure of the instructor) Fri., at 12. Professor Harris.

This course deals with the following problems on both a historical and current basis: the allocation of resources; income policies; the financing problems; the avoidance of inflation; the incidence of inflation; the relevance of controls; international aspects.

Source: Final Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences During 1951-52. Official Register of Harvard University, Vol. XLVIII, No. 21 (September 10, 1951) p. 77.

________________

Course Syllabus and Readings

Spring Term 1951-52
Economics 120
Economics of Mobilization and War

*Books to be bought

I. Introduction (1 week)

Nature of the problem: mobilizations of World War II and the 1950’s
Three models: peacetime economy, mobilization economy, war economy
Real costs and money costs
Prospects for the civilian standard of living

Reading

*1. Harris: Economics of Mobilization and Inflation, Ch. 1 (pp. 3-25)
2. Keynes: How to Pay for the War, Chs. 1, 2 (pp. 1-12)
3. Hart: Defense Without Inflation, Ch. 9 (pp. 165-185)
4. Pigou: The Political Economy of War, Ch. IV (pp. 47-55)

 

II. The Problem in Real Terms: Optimal Division of Resources (3 weeks)

Allocation of resources, manpower, and facilities; changing nature of output
International aspects
Production scheduling; “bottlenecks”
Administration of military procurement

Reading

1. Pigou: The Political Economy of War, Ch. III (pp. 29-47)
2. Harris: Economics of Mobilization and Inflation, Chs. 2-6 (pp. 25-85)
3. Office of Defense Mobilization: Three Keys to Strength (Third Quarterly Report to the President) or subsequent reports.
*4. Chandler and Wallace: Economic Mobilization and Stabilization, Chs. 4, 5 (pp. 91-136)

 

III. The Problem in Money Terms: Adequate Funds Without Runaway Inflation (3 weeks)

Financing the War; the “inflationary gap”
Why is inflation harmful? Uneven incidence of inflation
The Fiscal Policy attack on inflation
The Direct Controls attack on inflation
Interrelatedness of Fiscal Policy and Direct Controls

Reading

1. Keynes: How to Pay for the War, Ch. 2 (above)
2. Pigou: The political Economy of War, Chs. VII, VIII (pp. 72-94)
3. Harris: Economics of Mobilization and Inflation, Chs. 7-10, 18, 19, 22 (pp. 85-119; 197-214; 245-256)
4. Hart: Defense Without Inflation, Chs. 1, 4 (pp. 3-18, 59-77)
5. Galbraith: A Theory of Price Control, Chs. 4, 5, 6, 7, 8 (pp. 28-75)
6. Scitovsky, Shaw and Tarshis: Mobilizing Resources for War, Ch. 2 (pp. 101-144) and pp. 145-149 of Ch. 3
7. Chandler and Wallace: Economic Mobilization and Stabilization, pp. 34-59 and Ch. 26 (pp. 569-592)
8. Harris: Price and Related Controls in the United States, Ch. II (pp. 29-38)

 

IV. Fiscal Policy: Its Implementation and Effects (3 weeks)

Funds for financing mobilization: taxes or loans?
Reducing aggregate demand: taxes, savings, or deferred payment?
Burden of the public debt

Reading

1. Pigou: The Political Economy of War, Chs. VII VIII (above)
2. Harris: Economics of Mobilization and Inflation, Chs. 11-17, Chs. 22-24 (pp. 119-197, 245-286)
Chandler and Wallace: Economic Mobilization and Stabilization, Part III and Ch. 15 (pp. 180-272, 273-315)
4. Keynes: How to Pay for the War, Ch. V (pp. 27-34)

 

V. Direct Controls: Principles and Techniques (3 weeks)

Allocation of resources: priorities
Price control, rationing, wage control, rent control
Costs, prices, subsidies, supplies
International Aspects

Reading

1. Hart: Defense Without Inflation, Ch. 5 (pp. 78-97)
2. Harris: Price and related Controls in the United States, Chs. III-VIII, XI, XII, XVIII, XXI, XXII, XXV, XXVII
3. Galbraith: A Theory of Price Control, Ch. 8 (above)
4. Harris: Economics of Mobilization and Inflation: Ch. 20, 21 (pp. 214-245)

 

VI. Summary and Alternative Policies

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003 (HUC 8522.2.1), Box 5, Folder “Economics, 1951-1952 (1 of 2)”.

________________

Reading Period Assignment

HARVARD UNIVERSITY
Department of Economics
Reading Period Assignments
May 5 – May 24, 1952

Economics 120:

Bureau of the Budget: THE U.S. AT WAR. Chs. 5 through 7, 9 through 12, 15 and 16.

D. N. Chester (Ed.): LESSONS OF THE BRITISH WAR ECONOMY.

Baruch: AMERICAN INDUSTRY IN THE WAR, First Annual Report of the Activities of the Joint Committee on Defense Production. Read 250 pages dealing primarily with stabilization agencies. (Superintendent of Documents)

Joint Committee on the Economic Report: MONETARY POLICY AND MANAGEMENT OF THE PUBLIC DEBT, Part I. Read either pp. 1-194 or 207-492.

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003 (HUC 8522.2.1), Box 5, Folder “Economics, 1951-1952 (1 of 2)”.

________________

Final Examination
May 1952

1951-52
HARVARD UNIVERSITY
ECONOMICS 120

Instructions: Answer both questions in Part I, and any two questions in Part II.

Please write legibly!

Part I

  1. (a) Summarize the “disequilibrium system” and the “pay-as-you-go” approaches to stabilization. What are the advantages and disadvantages of each as applied to the current mobilization period? (20 points)
    (b) Most practicable programs involve some combination of direct and indirect controls. Discuss the theoretical bases for monetary, fiscal, and direct controls, respectively, and explain clearly the theoretical interrelatedness of these measures. (20 points)
  2. Write a critical summary of some phases of your reading period assignment. (10 points)

 

Part II

  1. (a) Indicate briefly—by chart, if you prefer—the organizational hierarchy of the present mobilization and stabilization agencies and summarize briefly the function of each agency. (5 points)
    (b) Summarize the economic issues of the current Steel Case. Include in your answer such points as the WSB recommendations, the criteria for the recommendations, controversial issues, etc. (20 points)
  2. Define or identify and then discuss the significance of five (5) of the following: (5 points each)
    (a) Low end problem
    (b) Formula pricing
    (c) Controlled Materials Plan
    (d) Little Steel Formula
    (e) Differential pricing
    (f) Margin of tolerance and the Inflationary Gap
    (g) Simplification programs
    (h) Priority inflation
    (i) Export controls
  3. Outline the major economic institutions of the ideal “free enterprise” system and indicate what functions they perform. How are these functions carried out in a war economy such as the current one? (25 points)
  4. Discuss the problems which mobilization brings to the following areas:
    (a) Agriculture (5 points)
    (b) National Debt Management (10 points)
    (c) Welfare Expenditures (10 points)

 

Source: Harvard University Archives. Final Examinations, 1853-2001. Box 27. Faculty of Arts and Sciences. Papers Printed for Final Examinations: History, History of Religions, …, Economics, …, Air Sciences, Naval Science. June, 1952.

Image Source:  Seymour Harris in Harvard College, Class Album 1957, p. 67.

Categories
Harvard History of Economics Suggested Reading Syllabus

Harvard. History of Economics. First semester readings and exams. O. H. Taylor, 1955-56

 

Overton H. Taylor described his book, A History of Economic Thought: Social Ideals and Economic Theories from Quesnay to Keynes (McGraw-Hill, 1960), as “an outgrowth from, or reduction to book form of, a part of the course of lectures, covering the same ground, which I have given annually for many years at Harvard University.”  This post provides the graduate course outline for the first semester and final examinations for both semesters of his course for the 1955-56 academic year. It is something of a mystery that no syllabus with reading assignments for the second semester of the course  can be found in the Harvard archive’s collection of course syllabi (also not for the previous year either). Perhaps the second semester was structured according to the interests of the students in the course and Taylor simply announced reading assignments as they went along. At least the final examination questions from June 1956 give some indication of the material covered (Marx, Austrian value theory, neo-classical economics in general and Marshall in particular, Veblen…but not Keynes).

*  *  *  *  *  *

Earlier syllabi and exams by Taylor in the history of economics have been posted earlier:

Syllabus. Economics 115 (Fall Term, 1948-49). Economics and Political Ideas in Modern Times.

Final Exam. Economics 115 (Fall Term, 1948-49). Economics and Political Ideas in Modern Times.

Syllabus and Final Exam. Economics 115 (Spring Term, 1947-48). Economics and Political Ideas in Modern Times.

A much earlier version of the material for a one semester course:

Syllabus. Economics 1b (Spring Term, 1940-41). The Intellectual Background of Economic Thought.

Final Exam. Economics 1b (Spring Term, 1940-41). The Intellectual Background of Economic Thought.

Greater emphasis on economic theory was given in his graduate course:

Syllabus. Economics 205a (Fall Term, 1948-49). Main Currents of Thought in Economics and Related Studies over Recent Centuries.

In the Preface to his 1960 book Taylor described his purpose in writing as follows:

Perhaps I have a desire to be a ‘missionary’ in both directions–to convert as many noneconomist or lay readers as I can into interested students of economic theory and its history, and to convert more fellow-economists into interested students, also, of the diverse, general views or perspectives on all human affairs which formerly concerned all philosophical political economists.

______________________

HARVARD UNIVERSITY
Department of Economics
Fall Term, 1955-56

Economics 205
History of Economic Theory
[O. H. Taylor]

I. Sept. 26-30. Introduction.

Reading due Sept. 30. (1) J. A. Schumpeter, History of Economic Analysis, Part I, (45 pp.). (2) Review of the Schumpeter History, by O. H. Taylor, in (Harvard) Review of Economics and Statistics, Feb. 1955. (3) Essay, “Philosophies and Economic Theories in Modern Occidental Culture,” by O. H. Taylor in volume, Ideological Differences and World Order, ed. by F. C. S. Northrup. (Also available in O. H. Taylor essays, Economics and Liberalism).

Mon., Sept. 26. Introductory lecture: Aims, scope, and plan of course. Reasons for studying history of economic thought. Interrelations of the history of our “science”, history of popular politico-economic thought, and general backgrounds of economic, social, political, and intellectual history.

Wed., Sept. 28. Second Lecture: A preliminary survey of our subject matter and its-over-all pattern; characters of main developments in antiquity, the middle ages, early-modern times (“mercantilism”), the eighteenth century, classical political economy and its critics, socialism and Marxism, the historical schools, neo-classical systems, and 20th century economics.

Fri., Sept. 30. Class Discussion (no lecture), chiefly on Schumpeter History, Part I.

 

II. Oct. 3-7. Antiquity—Plato and Aristotle and Stoicism, Roman Law, and Early Christianity.

Reading due Oct. 7. (1) G. H. Sabine, History of Political Theory, first 6 chapters. (2) Schumpeter, History, Part II, Ch. 1.

Mon., Oct. 3. Lecture: Ancient Athenian life and thought, and Plato’s philosophy, politics, and economics.

Wed., Oct. 5. Lecture: Aristotle’s philosophy, politics, and economics; and effects on later economics, that of Stoicism, Roman Law, and early Christianity.

Fri., Oct. 7. Class discussion.

III. Oct. 10-14. The Middle Ages—Scholastic Thought—Aquinas.

Reading due Oct. 14. (1) Sabine, History of Political Theory, Ch. 13 (“Universitas Hominum”: St. Thomas and Dante). (2) Schumpeter, History of Economic Analysis, Part II, Ch. 2, 1st 5 sections.

Mon., Oct. 10. Lecture: Mediaeval Europe, its life and thought; scholastic philosophy and economics; St. Thomas Aquinas.

Wed., Oct. 12. Holiday.

Fri., Oct. 14. Discussion.

IV. Oct. 17-21. Early Modern Europe—Growth of capitalism, national states, the modern (as opposed to mediaeval) intellectual climate, and the ideas and practices of political absolutism and “mercantilism”. (2) The general and political philosophy of Hobbes.

Reading due Oct. 21: (1) Schumpeter, History, Part II, Ch. 2, Secs. 6, 7; and Chs. 3, 4. (2) Hobbes, Leviathan, Chs. 1-6 incl., and 13, 14, 15, 17, 21, 24.

Mon., Oct. 17. Lecture: From Mediaevalism to modernity; Evolution of the main elements of modern-western civilization, in the England and Western Europe of the 16th and 17th centuries.

Wed., Oct. 19. Lecture: The general and political philosophy of Hobbes, and its relation to “mercantilist” economic thought and policy.

Fri., Oct. 21. Discussion.

V. Oct. 24-28. Economic Analysis in the Age of “Mercantilism.”

Reading due Oct. 28: (1) Schumpeter, History, Part II, chs. 5, 6, and 7. (2) Look at, read in, “sample,” some of following: Sir T. Mun, England’s Treasure by Foreign Trade; Sir J. Child, A New Discourse on Trade; J. Locke, Considerations on Lowering Interest by Law and Raising the Value of Money; Sir D. North, Discourses on Trade; Sir W. Petty, Economic Writings (Hull, Editor, vol. 1, especially Editor Hull’s introduction and pp. 43-49, 74-77, 89-91, 105-114).

Mon., Oct. 24. Lecture: “Mercantilism” and the 17th century beginnings of modern economic science.

Wed., Oct. 26. Lecture: The transition from “mercantilist” to 18th century “liberal” thought in economics.

Fri., Oct. 28. Discussion.

VI. Oct. 31-Nov. 4. Liberalism, Locke, and the 18th Century Enlightenment.

Reading due Nov. 4: (1) O. H. Taylor essays, “Economics and Ideas of Natural Law,” Quarterly Journal of Economics, Vol. 44, pp. 1 ff, and 205 ff. (also available in O. H. Taylor, Economics and Liberalism). (2) Review Schumpeter, History, Part II, Ch. II, Secs. 5, 6, 7. (3) J. Locke, Second Treatise on Civil Government, Chs. 2-9 incl.

Mon., Oct. 31. Lecture: History of ethical-juristic and natural-scientific “natural law” ideas, and early-modern liberalism; Grotius and others.

Wed., Nov. 2. Lecture: Newton, Locke, and the 18th century’s philosophic vision of the “natural order.”

Fri., Nov. 4. Discussion.

VII. Nov. 7-11. The Philosophy and Economics of the Physiocrats.

Reading due Nov. 11: (1) G. H. Sabine, History of Political Theory, Ch. 27 (“France: the Decadence of Natural Law.”) (2) Review, O. H. Taylor Essays, “Economics and Ideas of Natural Law,” and Schumpeter, History, Part II, Ch. IV.

Mon., Nov. 7. Lecture: The Physiocrats.

Wed., Nov. 9. Lecture: The Physiocrats (continued).

Fri., Nov. 11. Discussion.

VIII. Nov. 14-18. Adam Smith I. His forerunners in moral philosophy (Shaftesbury, Hutcheson, Hume), and his Theory of Moral Sentiments; and the relation of this material to the Wealth of Nations.

Reading due Nov. 17: Selby-Bigge, British Moralists, Selection from Smith’s Theory of Moral Sentiments.

Mon., Nov. 14. Lecture: The psychology and ethics, and philosophy of “the natural order,” of the 18th century Scottish “sentimental” moralists.

Wed., Nov. 16. Lecture: Adam Smith’s philosophy, psychology and ethics, and economics.

IX. Nov. 21-25. Adam Smith II. Economics.

Reading due Nov. 25: Wealth of Nations, Book I, first 7 chapters.

Mon., Nov. 21. Lecture: Adam Smith’s Inquiry into The Wealth of Nations (scope and nature of the book, etc.); and his theory of production, economic progress, “the system of natural liberty,” and “natural” prices, wages, profits, and rents.

Wed., Nov. 23, Lecture: Smith on capital, money, international trade, and other topics.

Fri., Nov. 25. Discussion.

X. Nov. 28-Dec. 2. Utilitarian Liberalism, Benthamism, and Classical (Ricardian) Political Economy.

Reading due Dec. 2: (1) G. H. Sabine, History of Political Theory, Chapter “Liberalism.” (2) Schumpeter, History of Economic Analysis, Part III, first 3 chapters. (3) Selby-Bigge, British Moralists, Selection from Bentham’s Introduction to Principles of Morals and Legislation. (4) J. Bentham, Rationale of Reward, Part II.

Mon., Nov. 28. Lecture: Liberal thought in the “natural law” and “utilitarian” versions; Benthamism; and the relation of this wider system of thought to “classical” economics.

Wed., Nov. 30. Lecture: Benthamism and classical economics, concluded.

Fri., Dec. 2. Discussion.

XI. Dec. 5-9. Malthus and Ricardo.

Reading due Dec. 9: (1) Schumpeter, History, Part III, Chs. 4, 5. (2) Ricardo, Principles, Chs. 1-6.

Mon., Dec. 5. Lecture: The Malthusian population principle, its ideological and scientific backgrounds and bearings, and its place in “classical” economics. (2) Malthus vs. Ricardo on other questions in economics.

Wed., Dec. 7. Lecture: Ricardo and his fundamental doctrines.

Fri., Dec. 9. Discussion.

XII. Dec. 12-16. Contemporary Criticisms of Classical Economics, and Rival Currents of Thought in the Same Epoch.

Reading due Dec. 16: (1) T. Carlyle, Past and Present, parts I and III. (2) J. Ruskin, Unto This Last. (3) A. Comte, Positive Philosophy, tr., Harriet Martineau, Introduction and Ch. 1 and Book VI, ch. 1.

Mon. Dec. 12. Lecture: Old and new currents and cross-currents of thought in this period. Advances in economic analysis in other quarters apart from the “classical” one. Contemporary Ideologies and “Lay” criticisms—Romantic, Positivistic, and “Reactionary” and “Radical.”

Wed., Dec. 14. Lecture: (1) Romantic-Conservative Thought in the Period vs. the Utilitarian-Liberal and Classical-Economic viewpoints. (2) Positivism and Comtism vs. liberalism and economics.

Fri., Dec. 16. Discussion.

Reading Period:

J. S. Mill, Principles of Political Economy

Book I—Chs. 3, 4, 5, 10, 11, 12
Book III—Chs. 1-4 incl., and 11, 15, 16
Book III [sic]

Source:  Harvard University Archives. Syllabi, course outlines and reading lists in economics, 1895-2003. Box 6, Folder “Economics, 1955-1956 (1 of 2) and (2 of 2)”.

______________________

1955-56
HARVARD UNIVERSITY

ECONOMICS 205
[Mid-year exam, January 1956]

Write half-hour essays on six (6) of the following:

  1. (a) Summarize, and discuss, the main ideas on “economic” (?) subjects that appear in Plato’s Republic. (b) With what tenets of Plato’s philosophy were those ideas connected? Explain these connections. (c) Do you think that modern economics presupposes other, very un-Platonic views in philosophy? Explain and defend your answer to (c).
  2. (a) What principal achievements in economic analysis does Schumpeter credit to the mediaeval scholastic doctors? (b) How, if at all, were their contributions affected (1) in Schumpeter’s view and (2) in your own view, by Scholastic doctrines in philosophy and ethics?
  3. Try to say as concisely and fully as you can, what seem to you the most important things to be said about “mercantilism” as a cluster of economic ideas and policies.
  4. (a) Who were the “econometricians” who are referred to as such in the title of Schumpeter’s chapter “The Econometricians and Turgot”? Identify as many of them as you can, giving names, approximate dates, and when possible, titles of their best-known writings. Then (b) characterize, a little more fully, the work, ideas, and contributions of one important member of that group.
  5. Explain and discuss either (a) the nature and significance of Quesnay’s tableau economique, (b) the Physiocratic philosophy of “the natural order”; or (c) the assumptions and reasoning behind the Physiocratic doctrines leading to identification of the land-rent-income of the proprietary class, with the entire national produit net, and to the views about taxation and other matters based upon that.
  6. “Adam Smith’s economic liberalism resulted logically, not from his ideas in economic theory only, but jointly from those and his fundamental views in philosophy, ethics, psychology, and sociology.” What main Smithian ideas, in each of those fields, in your view, played what parts in the full Smithian argument for economic liberalism?
  7. How do you explain both (1) the very high estimate, by Ricardo’s admirers in England, of the value of his contributions to economic science, and (2) Schumpeter’s rather low estimate of the same? Finally, what kind of an estimate would you offer as your own, and how would you defend it?
  8. Explain, and discuss critically, what you think J. S. Mill meant to assert, in his dictum about the laws of economic production vs. those of distribution—the dependence of the latter but not of the former on human institutions.

Source:  Harvard University Archives.  Harvard University. Final Examinations, 1853-2001. Box 23. Papers Printed for Final Examinations. History, History of Religions, …, Economics, …, Naval Science, Air Science  (January, 1956).

______________________

1955-56
HARVARD UNIVERSITY

ECONOMICS 205
[Final exam, June 1956]

Write one-hour essays on three (3) of the following subjects:

  1. A comparative discussion of the theories of economic development of Ricardo, Marx and Schumpeter.
  2. A comparative discussion of the Ricardian, Austrian, and Marshallian theories of the foundations and adjustment (into equilibrium) of the values and prices of different goods in a competitive economy.
  3. Your own views and arguments as to whether and how far the body of “marginal analysis” worked out in “neo-classical” economics was (1) a great advance in giving economics the precision and rigor of aa real science; or (2) a sad decline into a deadly-dull, unrealistic, and unimportant kind of theorizing, preoccupied with trivialities.
  4. Your own “sorting out,” in Veblen’s thought, of what you regard as his valid insights, and his to-be-rejected notions, (a) as a critic of traditional economic theory, and (b) as a critic of capitalism or the business culture.

Source:  Harvard University Archives.  Harvard University. Final Examinations, 1853-2001. Box 24. Papers Printed for Final Examinations. History, History of Religions, …, Economics, …, Naval Science, Air Science (June, 1956).

Image Source: Harvard Class Album 1952.

 

Categories
Economists Harvard Lecture Notes

Harvard. Tobin’s notes to lecture by Alvin Hansen on Keynes’ General Theory, May 1938

 

The following notes were taken by James Tobin at the end of his junior year at Harvard. The notes for this lecture by Alvin H. Hansen on Keynes’ General Theory were “filed” as loose-leaf pages inserted into a bound volume of Tobin’s handwritten course notes for Economics 41 (Money, Banking, and Commercial Crises, taught by John H. Williams and Seymour Harris). Hansen’s lecture might have been a guest lecture for that course since only a recitation section taught by Kenyon Edward Poole was included in the notes for that date.  

Also on that date in history at Harvard: Gunnar Myrdal held the second lecture in his four-lecture Godkin public lecture series “The Population Problem and Social Security”.

__________________

Lecture
5/4/38
Prof. Alvin H. Hansen of Garver & Hansen
Littauer Professor of Political Economy

Keynes’ General Theory.

Not mainly concerned with trade cycle. Ch[apter] on trade cycle not very original. Cycle consists in fluctuation of rate of investment-purchase of capital-goods. Keynes holds that fluctuations in rate of invest[ment] due to fluctuations in the rate of prospective profits, in the marg[inal] efficiency of capital. Keynes emphasizes the rôle of expectations—psychology. Quick shift from prosperity to depression due to violent shifts in expectation from optimism to pessimism.

Mainly concerned with larger problem of full empl[oyment] of labor and the other factors of production. Could still have trade cycle but its booms would hit full employment. But also conceivable is a society in which ceiling of fluctuations is below full empl[oyment]—permanent under-employment. This long-run under-empl[oyment] Keynes mainly concerned with. Modern societies tend to be in a situation of chronic under-employment. He accuses classicals of working on assumption that society has long-run tendency to full empl[oyment]. Classical writers were concerned with pricing system and returns to different factors, and how much labor, etc., was used. R[ate] of int[erest] for example determined amount of saving cped [compared?] to consumption out of given income. This according to K[eynes] only goes with full empl[oyment] assumption. Rise in consumption in condition of under-empl[oyment] will lead to rise in investment as well. These are not alternatives until there is full empl[oyment]. This well realized by bus[isness] cycle theorists. Keynes applies it to long-run analysis.

What determines the volume of employment?

1) Rate of interest
2) Marg[inal] efficiency of capital. (Prospective rate of profit anticipated by bus[iness] man.)
3) Propensity to consume.

Nothing new about introducing rate of int[erest] as a determinant. Wicksell 1898 set forth determinants of expansion as prospective rate of profit on one side and r[ate] of int[erest] on the other side. Keynes adds the propensity to consume. dC/dY >0, <1, decreases. Rich societies have tendency to fail to maintain level of income once achieved. A society which consumes all of its income would have no difficulty in maintaining its level, because no deficiency in income-spending from incomes pd [paid] out to factors. If some part is not spent on consumers’ goods—just saved without a purchase of capital-goods – those who save are not actual investors-entrepreneurs—and there is not an equal amount of new investment, there is a tendency for incomes to fall. If propensity to consume is low, other determinants of employment must be very strong—high prospective rate of profit, low r[ate] of int[erest]—in order to balance saving.

“Classical” relation of r[ate] of int[erest] to saving. Later classical writers qualified argument: if r[ate] of int[erest] is very high, more saving; if low, less. But in between, there are the fixed-income savers. Keynes: determinant is level of incomes. Wouldn’t say no relation of saving to r[ate] of int[erest]. Given r[ate] of int[erest], determinant is level of incomes. There is for K[eynes] then no minimum r[ate] of int[erest], such as Cassel found: if int[erest] falls there because of shortness of human life people will say int[erest] is so low that not much income from it. Hence they will consume capital. At this p[oin]t tendency for saving to decrease, & consumption [to] increase. For K[eynes] there is another minimum point, below which there is not decrease of saving but an increase of hoarding. K[eynes] distinguishes mkt [market] & pure rates of int[erest]. Special risk in buying long-term commitment—risk is that r[ate] of int[erest] will rise a little bit in future, price of bond will drop so as to wipe out all int[erest] gain on it. Hence there is pt[point] where we won’t bother to buy securities but will hold cash. R[ate] of int[erest]not driven down below point of consump[tion] ncrease. What people will do is hold savings in liquid forms.

In rich community, marg[inal] efficiency of capital low; propensity to consume low; but rate of int[erest] can’t keep falling because of liquidity-preference. Hence there is not adequate volume of new invest[ment] to maintain full employment. R[ate] of int[erest] doesn’t drop to point where people stop saving & consume more, & rectify the difficulty; but is held up by liquidity preference.

Emphasizes largely r[ate] of int[erest]; Spiethoff thinks important thing in expansion is marg[ignal] efficiency of capital, which K[eynes] largely takes for granted. Spiethoff’s factors influencing prospective rate of profit on new invest[ment]: expanding market, increasing population, inventions & giant industries. All these associated with a young & growing capitalism, as in 19th.—unique century, conquering the world and revolutionizing the industrial technique and expanding population. Now decline in population, and no new mkts [markets]. K[eynes] assumes this exploitation of opportunities & emphasizes the monetary rate of int[erest], not as Spiethoff on non-monetary influences on marg[inal] efficiency. Risk & uncertainty of modern world decrease the will to invest—and perhaps also the tendency to save w[oul]d be greater. Failure of invest[ment] outlet.

K[eynes]’s solutions:

1) Artificially create a low rate of interest.
2) Stimulate consump[tion] by redistribution of income.
3) Enlarge volume of public investment.

[Qualifications]

1) How far will stimulate invest[ment] doubtful.
2) Effects of taxation for this purpose may hurt private invest[ment]
3) Public invest[ment] may be offset by private invest[ment] decline.

            Economic policies are choice among evils.

 

Source: Yale University Archives. Papers of James Tobin.  Box 6, Loose pages in bound lecture notes for Economics 41 taken by James Tobin during the 1937-38 academic year at Harvard University.

Image Source: James Tobin senior year portrait in Harvard Class Album, 1939.