Robert Leeson wrote:
> ----------------- HES POSTING -----------------
> Rod Hay asks for details of the Pigovian multiplier:
>
> Several economists, including Pigou, developed (at the level of theory and policy) the idea of employment creation having multiple repercussions; although most failed to make it central to their analysis or to link it up, as Keynes did, to aggregate demand management.  Pigou's multiplier may (or may not) have been analytically or descriptively inferior to Kahn's; but it certainly existed and appears to be both sophisticated and realistic.
>   


Robert Leeson's details of the Pigovian multiplier, jogged my memory of 
a passage in Pigou, as quoted by David Laidler in /Fabricating the
Keynesian Revolution/, p. 175, in which he provides a kind of reduction 
ad absurdum argument against the multiplier:

"It is often argued that, if . . . the number of men employed in 
road-making or other sorts of capital construction, is increased, 
without offsetting reductions in other non-wage-good industries, a large 
mass of further employment will be created in the industries that make 
wage-goods by the expenditure of the newly employed men. . . The people 
set to work on road-making, or whatever it may be, have, /pro tanto/, 
more money to spend; they spend it, and so set to work more makers of 
the wage-goods that they buy; these, by spending their money, set to 
work more makers of the wage-goods /they/ buy; and so on indefinitely.  
Indeed, according to this argument, it is only because some of the 
wage-earners' goods are bought from abroad that the setting of a single 
new man to work on road making does not cause an indefinite number of 
men to obtain employment in making wage-goods!  (Pigou 1933, pp. 74-75, 
italics in original)."

Pigou argues that, but for leakages to imports, the multiplier would 
have to be infinite, and apparently can't credit such nonsense.  He 
apparently doesn't imagine the possibility of leakages in the form of a 
propensity to save.

Kevin Hoover