Lange's 1938 Model: Dynamics and the "Optimum propensity to consume"

Michaël Assous and Roberto Lampa
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Roberto Lampa: CONICET (National Scientific and Technical Research Council)

No 2014-02, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: Oskar Lange’s 1938 article “The Rate of Interest and the Optimum Propensity to Consume”, is usually associated with the original IS-LM approach of the late 1930s. However, Lange’s article was not only an attempt to illuminate Keynes’s main innovations but the first part of a wide project that included the development of a theory of economic evolution. This paper aims at showing that Lange’s article can help illuminating critical aspects of this project: in particular, Lange’s idea that a synthesis between Kaldor’s and Kalecki’s theories and that of Schumpeter, might have been possible and that it represented (in intentions) a “modern” and consistent reconstruction of the Marxist theory of the business cycle. Section 1 clarifies Lange’s early reflection on dynamics. Section 2 centers on Lange’s 1938 static model and indicates the effects of a change of saving on investment. Section 3 suggests a dynamic reconstruction from which are addressed important arguments raised by Lange in a series of papers written between 1934 and 1942.

Keywords: Lange; Kalecki; Marxian theory of the business cycle; marginal propensity to save; non-linearity (search for similar items in EconPapers)
JEL-codes: B22 B24 E12 E32 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2014-01
New Economics Papers: this item is included in nep-his, nep-hpe, nep-mac and nep-pke
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Journal Article: Lange's 1938 model: dynamics and the "optimum propensity to consume" (2014)
Working Paper: Lange’s 1938 model: dynamics and the “Optimum propensity to consume” (2014)
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