Materials (reading list and exams) for Fritz Machlup’s course on income distribution, 18-603, have been transcribed and posted earlier. Economics in the Rear-view Mirror also has a transcription of the final exam for his 1956 course on methodology.
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Course Announcement
Theory of Aggregate Income 604. Professor Machlup.
Two hours weekly, second term.
A study of the theory of income formation, linking an analysis of the supply and circulation of money with a dynamic process analysis of autonomous and induced disbursements for consumption and investment; an attempt to explain the level and fluctuations of national income.
Source: Johns Hopkins University. School of Higher Studies of the Faculty of Philosophy, Announcements of Courses 1950-51 (The Johns Hopkins Circular, April 1950), p. 99.
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JOHNS HOPKINS UNIVERSITY
THE THEORY OF AGGREGATE INCOME
18-604
Prof. Fritz Machlup
READING LIST
Spring Term 1951
Books:
Required:
J. M. Keynes, The General Theory of Employment, Interest and Money. (London: Macmillan, New York: Harcourt Brace, 1936) pp. 1-384.
Recommended:
Richard Ruggles, An Introduction to National Income and Income Analysis. (New York: McGraw-Hill, 1949)
Thomas C. Schelling, National Income Behavior. (New York: McGraw-Hill, 1951)
A.E.A., Readings in Business Cycle Theory. (Philadelphia: Blakiston, 1944)
Seymour E. Harris (ed.), The New Economics. New York: Knopf, 1947)
I. Static and Dynamic Analysis
Paul A. Samuelson, “Dynamic Process Analysis,” A Survey of Contemporary Economics, ed. Howard S. Ellis. (Philadelphia: Blakiston, 1948) pp. 352-387.
II. Savings, Investment, and National Income
Bertil Ohlin, “Some Notes on the Stockholm Theory of Saving and Investment,” Readings in Business Cycle Theory, pp. 87-131.
Friedrich A. Lutz, “The Outcome of the Saving-Investment Discussion,” Readings in Business Cycle Theory, pp. 131-157.
Abba P. Lerner, “Saving and Investment: Definitions, Assumptions, Objectives,” Readings in Business Cycle Theory, pp. 158-168.
Oscar Lange, “The Rate of Interest and the Optimum Propensity to Consume,” Readings in Business Cycle Theory, pp. 169-192.
Fritz Machlup, “Forced or Induced Saving,” The Review of Economics and Statistics, Vol. 25 (1943), pp. 26-39.
Dennis H. Robertson, “A Survey of Modern Monetary Controversy,” Readings in Business Cycle Theory, pp. 311-329.
III. The Multiplier
Fritz Machlup, International Trade and the National Income Multiplier (Philadelphia: Blakiston, 1943) Chapters 1-7, 10.
Gottfried Haberler, “Mr. Keynes’ Theory of the ‘Multiplier’: A Methodological Criticism,” Readings in Business Cycle Theory, pp. 193-202.
Fritz Machlup, “Period Analysis and Multiplier Theory,” Readings in Business Cycle Theory, pp. 203-234.
Robert Eisner, “The Invariant Multiplier,” Review of Economic Studies, Vol. 17 (1949-50), pp. 198-202.
IV. Velocity and Time Lags
James W. Angell, “The Components of Circular Velocity of Money,” Quarterly Journal of Economics, Vol. 51 (1937), pp. 224-272.
Lloyd Metzler, “Three Lags in the Circular Flow of Income,” Income, Employment, and Public Policy. (New York: W.W. Norton and Company, 1948), pp. 11-32.
Alvin H. Hansen, “The Robersonian and Swedish Systems of Period Analysis,” Review of Economics and Statistics, Vol. 32 (1959), pp. 24-29.
Harold M. Somers, “A Theory of Income Determination,” Journal of Political Economy, Vol. 58 (1950), pp. 523-541.
V. Wage Rate Reductions and Employment
A. C. Pigou, “Real and Money Wage Rates in Relation to Unemployment,” Economic Journal, Vol. 47 (1937), pp. 405-422.
N. Kaldor, “Professor Pigou on Money Wages in Relation to Unemployment,” Economic Journal, Vol. 47 (1937), pp. 745-762.
A. C. Pigou, “Money Wages in Relation to Unemployment,” Economic Journal, Vol. 48, (1938), pp. 134-137.
James Tobin, “Money Wage Rates and Employment”, in The New Economics, pp. 572-587.
VI. Tax-Financed Government Expenditures
Trygve Haavelmo, “Multiplier Effects of a Balanced Budget,” Econometrica, Vol. 13 (1945), pp. 311-318.
Gottfried Haberler, “Multiplier Effects of a Balanced Budget: Some Monetary Implications of Mr. Haavelmo’s Paper,” Econometrica, Vol. 14 (1946), pp. 148-149.
R. M. Goodwin, “Multiplier Effects of a Balanced Budget: The Implications of a Lag for M. Haavelmo’s Analysis,” Econometrica, Vol. 14 (1946), pp. 150-151.
Everett E. Hagen, “Multiplier Effects of a Balanced Budget: Further Analysis,” Econometrica, Vol. 14 (1946), pp. 152-55.
T. Haavelmo, “Multiplier Effects of a Balanced Budget: Reply,” Econometrica, Vol. 14 (1946), pp. 156-58.
VII. The Accelerator
John M. Clark, “Business Acceleration and the Law of Demand: A Technical Factor,” Readings in Business Cycle Theory, pp. 235-260.
Paul A. Samuelson, “Interactions Between the Multiplier Analysis and the Principle of Acceleration,” Readings in Business Cycle Theory, pp. 261-269.
F. A. Hayek, Profits, Interest, and Investment. (London: Routledge and Sons, 91939) Chapter I, pp. 3-72.
F. A. Hayek, “The Ricardo Effect,” Economica (1942), pp. 126-152.
Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Evsey D. Domar Papers, Box 15, Folder “Macroeconomics: Old Reading Lists”.
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THE JOHNS HOPKINS UNIVERSITY
Theory of Aggregate Income
(18-604)
Final Exam, May 29, 1951
Professor Fritz Machlup
Answer three questions, one of each group, as concisely as possible without omitting significant steps in your reasoning. Write in English rather than in algebra or geometry.
I.
- Explain the possibilities of a general cut in money wage rates bringing about an increase in aggregate employment.
- Explain the increase in employment that can be brought about by an increase in tax-financed government expenditures, emphasizing alternatively the significance in the causal sequence of changes in (a) the quantity of money or velocity of circulation, (b) liquidity preference, (c) the propensity to consume, (d) the difference between investment and saving.
II.
- Explain the meaning of the distinctions between the “consumption lag”, the “output lag”, and the “earnings lag”, and their importance, or lack of importance, in the determination of income.
- Explain the meaning of the distinctions between “intended” and “unintended” saving, and “intended” and “unintended” investment, and their importance, or lack of importance, in the determination of income.
III.
- Explain the interactions between multiplier and accelerator.
- Explain the meaning of the “Ricardo Effect” and its importance, or lack of importance, in the determination of the accelerator and of the turning points of the business cycle.
Source: The Johns Hopkins University. The Eisenhower Library, Ferdinand Hamburger, Jr. Archives. Department of Political Economy, Series 6, Box 3/1, Folder “Graduate Exams, 1933-1965”.
Image Source: Fritz Machlup is seen presenting in a seminar (note: Evsey Domar is leaning forward on the right side of the table, third from the left). From the Johns Hopkins Yearbook Hullabaloo 1956, p. 15.