The hidden side of Jan Tinbergen’s approach to economic policy (1934-1944)

"This article provides a comprehensive view of Tinbergen's macrodynamic models during the 1930s and early 1940s, to show how the economist's concerns evolved from problems of instability to the idea of reaching higher positions of equilibria. Starting from the ideas developed around the first meetings of the Econometric Society, we show that Tinbergen built his own macrodynamic model with the aim to consider several problems of economic policy, in particular the effects of public expenditures and changes in money wages. One of the possibilities that Tinbergen underlined throughout his models was the threat of complete or partial collapse stemming from the presence of multiple equilibria. From the mid-1930s, Tinbergen gained confidence in the power of economic policies to stabilize the economy, and his attention shifted to the final position of equilibrium, and the policies that could improve it. His most well-known models developed for the League of Nations addressed that issue and showed how the final equilibrium may be shifted by "permanent" policies. We argue that Tinbergen also considered the case that the economy could be lifted by temporary policies in the presence of multiple equilibria. Based on papers published by Tinbergen in Dutch, French and German that for the most part have never been translated, this article offers a new perspective to the development of early macrodynamic modeling. From this literature the originality, breadth and pioneering ideas of Tinbergen clearly come out and explain many of his sometimes paradoxical policy positions."