Jan Tinbergen's early contribution to macrodynamics (1932-1936): multiple equilibria, complete collapse and the Great Depression

Michaël Assous () and Vincent Carret ()
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Michaël Assous: TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS de Lyon - École normale supérieure de Lyon - Université de Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique
Vincent Carret: TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS de Lyon - École normale supérieure de Lyon - Université de Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique, UL2 - Université Lumière - Lyon 2

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Abstract: In 1932, Jan Tinbergen proposed an explanation of the Great Depression based on a specific treatment of unstable processes and multiple equilibria. While he outlined a possible mechanism based on a specific treatment of firms' interactions, this first explanation was later abandoned in favor of more dynamic mechanisms, but he did not cast aside the idea of multiple equilibria and instability. After his involvement in the early meetings of the econometric society, he started working on different dynamic models that would account for this instability. In 1934, Tinbergen built a model to generate new types of economic movements that did not return to an equilibrium. This led him in 1936 to consider the possibility of having two equilibria, one stable, one unstable, with damped or self-sustained cycles around the high equilibrium and a collapse once the economy reaches the low equilibrium. Tinbergen saw these models, with reference to Fisher's 1933 classic Econometrica paper, as a way to interpret the potential of a crisis to trigger the collapse of the economy. At the end of the day, it turns out that Tinbergen managed to open a new avenue of research which, strikingly, remains almost totally ignored in most history of macroeconomics and econometrics.

Keywords: Jan Tinbergen; Great Depression (search for similar items in EconPapers)
Date: 2020-12-23
New Economics Papers: this item is included in nep-his and nep-hpe
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