Multiplier-accelerator model: Difference between revisions

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== Model ==

{{seealso|Multiplier (economics)#Keynesian and Hansen–Samuelson multipliers}}

The multiplier–accelerator model can be stated for a closed economy as follows:<ref name="Mullineux 1984">{{Cite book|author=A. W. Mullineux |year=1984 |title=The Business Cycle After Keynes: A Contemporary Analysis |publisher=Rowman & Littlefield |page=11 |url=https://books.google.com/books?id=237spXDRlwYC&pg=PA10 }}</ref> First, the market-clearing level of economic activity is defined as that which exactly matches the total of government spending intentions, households' consumption intentions and firms' investing intentions.

:<math>Y_{t} = g_{t} + C_{t} + I_{t}</math>

:<math>C_{t} = \alpha Y_{t-1} </math>