Simon Smith Kuznets’ academic contributions

Emphasis on empiricism

Kuznets believes that “the so-called theory means a statement of verifiable relationships between various empirically identifiable factors. These factors and relationships are relatively stable under different conditions such as time and place. This theory of economic growth of various countries is something we have never mastered. Obviously, we have not mastered it now, and more importantly, we are not ready yet. To master it... In the current environment, this theory would be a dogmatic reflection of some a priori characteristics of human nature... or a reflection of the formalist model of the economic growth mechanism, the derivation of correct relationships and the experience in formulas The data required by the constants lack complete guarantees... It seems that we should rather limit ourselves to the overly ambitious task of, say, making some suggestions from the empirical record... to serve as a basis for further data research and the verifiability of what is undertaken A guide in the direction of theoretical analysis.”

Since understanding economic phenomena is based on a large number of measurements, careful and systematic testing of the obtained data becomes the first step in Kuznets’ methodology. . As a rigorous scholar, Kuznets needed early data, which were often incomplete, in order to gain a firm view of underlying economic institutions and to isolate transient phenomena from a series of long-term movements. Data obtained from a variety of sources must be classified, organized, carefully combined, and the raw data assessed for error. Richard Goodwin's colorful metaphor in his review is apt: "Professor Kuznets drives his stake deep into the cavernous swamp of economic factors. Weaving a huge wooden raft to withstand a strong arch that he gradually and carefully built."

The second step in Kuznets's methodology is to classify the characteristics. This is a creative process that Wesley Mitchell calls "analytical illustration." In order to be able to infer the relationship between the data and the variables represented, and to test the consistency and rationality, the data must be classified, arranged and rearranged. Interpretations are inferred through judgment. Guided by the concepts of economic analysis, scattered and incomplete data are converted into measurements to supplement the theoretical framework and test the relationship between economic variables to the maximum extent.

Kuznets Cycle Theory

The discovery, testing, and explanation of business cycles were the focus of the National Economic Bureau's initial research program. Business cycles are limited to recurring events, rather than periodic fluctuations—expansion or contraction—that occur simultaneously in many economic activities. The economic cycle is 5 to 6 years, but it may also be 10 to 12 years. It is clearly pointed out as a long-term trend. Three cycles with average duration have been identified from business cycles and long-term trends, although there is debate about their continued validity. The mesocycle is often called the Kuznets cycle. The conclusions of the Kuznets cycle were drawn not only from original sources but also from two articles by one of his former students and colleagues, Moses Abramowitz. Due to the spontaneity of periodic motion, Abramowitz proposed using "oscillation" and "wave" instead based on Kuznets' experience.

After excluding the impact of trends and cyclical trends in the United States and eight other countries on 35% of the prices and 65% of the product series of goods produced, Kuznets found "a second Long term movement", with the average duration of its swings being 22 years. The existence of cycles in the overall economic activity was first discovered by Arthur F. Burns through research, and confirmed Kuznets' conclusion on individual commodities. Kuznets made significant pioneering contributions to economic science by linking passivity in economic activity to corresponding fluctuations in immigration, population growth, and growth in the labor force. He analyzed the relationship between economic and demographic changes. contribution. Population is a major determinant of economic activity, and economic activity can manifest itself as an impact on population growth. However, economists generally believe that population is an exogenous variable, for example when specifying the volume of production as cost per unit of output, that is, data need to be adjusted due to demographic factors. In fact, a weak Kuznets cycle has already been produced in the representational study of Klein-Goldberg's econometric model.

National Income Accounting Theory

Kuznets always treated some controversial conceptual and statistical issues encountered in his work carefully, paying careful attention to the classification of basic assumptions. He pays special attention to subjective factors that are difficult for data users to discern and to errors in accuracy. Hypotheses, definitions, and interpretations of published data are discussed in many of Kuznets' works. For example, gross national product is a comprehensive measure of economic activity and is the basis for business and government decision-making. However, it excludes some products and services because they are not clearly marked, and housework services are not included. , some illegal activities have also been excluded. Kuznets explains: "For example, 'blackmail' services obviously result in compensation, and their price depends on the supply and demand for such services on the market, so they are an integral part of our economic system, but if Including them in the gross national product fails to account for the contribution to the economic system that is extremely useful to society."

In addition, he has also dabbled in national income works and many domestic and international economics. Controversial Socio-Philosophical Issues in International Conferences. For example, the difference between final and intermediate, gross output and net output is a good example. To avoid double counting, GNP includes only final products. For example, the value of flour used in the production of the final product bread cannot be included in the GNP. However, by the same token, workers' transportation costs, which are included in the final product, can be viewed as intermediate costs of the products and services produced by the workers. The national income accounts also include the value of the cars produced and the value of the new machinery used to produce them, as well as the value of the machinery that is depreciated as a result of production. Estimates of net national product (gross national product minus depreciation of the capital stock) do not address this problem, and since some consumer goods are used to maintain the labor force, labor resources will also depreciate. Kuznets believes that these problems can be solved by establishing an agreement on the ultimate goals of economic activity. If the ultimate goal of society is to increase the supply of resources, one limit can be obtained; if the ultimate goal is consumer satisfaction, another limit can be obtained... A valid reason for formulating the concept of national income in this way is that because of the general Motivation must be measured as a positive contribution to an economic system that meets the current and future needs of the nation as a utility-maximizing consumer entity. This motivation to maximize consumption is mainly based on the perspective that commodities exist for people, not for humans. Kuznets continued his research on this issue and revised the definition of the market value of final products and outputs. Robert S. Eisner and an association edited the book "Estimation of the Total Revenue System of Accounts" based on Kuznets' concepts and ideas. National income statistics provide a framework that is indispensable for the management of modern policy. This framework has been widely used around the world over the past 50 years. Kuznets also helped compile initial revenue estimates for several countries established after World War II. Furthermore, national income accounts are a source of data on consumption, savings, investment, and other data needed to test macroeconomic models developed by economists in government, education, and research. Kuznets also made major contributions to this field of economics and statistics.

Economic Growth Theory

In his book "The Long-term Movement of Production and Prices" published in 1930, Kuznets proposed that the long-term dynamic growth process plays an important role in deepening the understanding of economic phenomena. central position in. In Kuznets' view, limiting economic analysis to static equilibrium theory will hinder its theoretical development. Kuznets was uncompromising in his insistence on the importance of long-term investigation. He pointed out: "If we neither know the overall process of change on which demand and supply react, nor the influence that the former may have exerted on the latter, then our study of the instantaneous and static responses of demand and supply will be How can it be comprehensive? "In the study of economic growth, Kuznets's method is obvious: compare the growth of a country or a group of countries in various periods, and compare the growth of some countries at different stages of development. Comparison of cross-sectional data at a specific point in time of the characteristic curve, as well as the study of relevant factors and their interrelationships. Although Kuznets also studied differences in growth patterns between regions, he believed that the "country" was the most appropriate unit of study, mainly because the dominant government has the ability to implement policies that promote or hinder economic growth.

In his speech as a Nobel Prize winner in Stockholm in December 1971, Kuznets proposed six interrelated aspects of modern economic growth. The most important of them is the rapid increase in total output and population; the second most important factor is the growth rate of production efficiency; the third aspect of the economic structure is from the dominance of agricultural production to the dominance of manufacturing and service industries. The fourth aspect is the change in social structure and way of thinking; the fifth aspect is the interdependence between countries caused by changes in communication and transportation technology; the last aspect is the signs of differentiation in the world economy.