Multiplier-Accelerator Model

Discipline: Economics

The Multiplier-Accelerator Model (also known as the Accelerator-Multiplier Model) is proposed by the English economist Roy Harrod (1900-1978) and the American economist Paul Samuelson (1915- ). Their work was an extension of the works of English economists John Maynard Keynes (1883-1946) and Richard Kahn (1905-1989).

The Multiplier-Accelerator Model analyzes economic fluctuations by combining the assertions of the acceleration and multiplier models. The cyclical process this model holds can be summarized in the following 4-step example:

1- Government expenditure increases, and boosts consumer income.
2- Consumer income raises aggregate output (through the multiplier effect).
3- Net investment also increases (through the acceleration process). 4- The process starts to repeat itself.

Also see: acceleration principle, fine-tuning, Kondratieff cycles, political business cycle, product life-cycle theory, sunspot theory, trade cycle


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