Breaking free from the stability dogma: Samuelson and the multiplier-accelerator model over the years

Résumé En

On the occasion of the centennial of his mentor Alvin Hansen, Paul Samuelson published in 1988 a modified version of his seminal 1939 multiplier-accelerator model with the specific aim to address aspects of Hansen's secular stagnation hypothesis. The "Keynes-Hansen-Samuelson" model (or KHS, as he called it) was built in order to provide an analysis of the effects of population growth on the trajectory of the economy. Several changes were then made. Instead of difference equations and a tight accelerator as in his 1939 model, Samuelson deployed differential equations and a flexible accelerator in order to produce a nonlinear limit cycle in the tradition of Richard Goodwin, as well as a life-cycle saving hypothesis. Despite Samuelson's strong claims for the analytical contributions of his 1988 paper, it has - in sharp contrast with the 1939 model - received only scant attention by macroeconomists and historians of economics alike. Samuelson's 1988 paper was his last published macroeconomic model, along the lines of his long established tradition of non-optimizing macro-dynamics. Our paper provides a close reading of Samuelson 1988, together with a discussion of how it historically links up with business cycle models advanced by John Hicks, Nicholas Kaldor, Roy Harrod and especially Goodwin, among others. Moreover, it investigates to what extent Samuelson's 1988 failure to attract a large readership has to do with the fact that macroeconomists' modelling strategy of endogenous business cycles changed sharply in the 1980s and after.