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Fluctuations and growth in Ragnar Frisch’s rocking horse model

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  • Carret, Vincent

Abstract

Ragnar Frisch's famous "rocking horse" model has been the object of much praise and even controversy since its publication in 1933. This paper offers a new simulation of the model to show that there exists cyclical trajectories in the propagation mechanism. By building an analytical solution taking the same form as Frisch's original solution, we can provide new insights into the ideas encapsulated in his model, in particular the fact that the author constructed a model combining cycles and growth. The exploration of Frisch's formal construction of the model leads us to link his statistical work on the decomposition of time series with his economic insights on investment cycles, which both led to the 1933 model. We contrast Frisch’s approach to that of other econometricians who used similar equations, showing that their different mathematical solutions were the product of what they wanted to show with their models.

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  • Carret, Vincent, 2021. "Fluctuations and growth in Ragnar Frisch’s rocking horse model," OSF Preprints 69nsg, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:69nsg
    DOI: 10.31219/osf.io/69nsg
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