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Super Multiplier
Alok Jung Joshi
Introduction
• Developed by Sir John Richard Hicks(19041989)
• First published in his book “A Contribution to
the Theory of Trade Cycle” (1950)
• Mathematical derivation of the interaction of
multiplier and accelerator
Why Super Multiplier?
• Ignored the induced increase in the aggregate
investment outlay
• Simple multiplier was based on the Great
Depression of thirties
Concept of Super Multiplier
• Mathematical derivation of the interaction of
multiplier and accelerator
• It explains the combine effect of multiplier and
accelerator on equilibrium income, output and
employment.
• Due to the inclusion of induced investment demand ,
super multiplier will be greater than simple multiplier
• According to Super multiplier , the total income in the
economy will increase by KS times the initial increase
in the autonomous investment.
Mathematically, it is expressed as,

where,

ΔY = change in income
ΔIa = change in autonomous investment
Ks = Super multiplier
Derivation of the equation
Y
S1
I1

E3

I
I

E2
I’a

E1

I

Ia

S

O

X
Y1

Y2

Y3

Output

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Super multiplier111

  • 2. Introduction • Developed by Sir John Richard Hicks(19041989) • First published in his book “A Contribution to the Theory of Trade Cycle” (1950) • Mathematical derivation of the interaction of multiplier and accelerator
  • 3. Why Super Multiplier? • Ignored the induced increase in the aggregate investment outlay • Simple multiplier was based on the Great Depression of thirties
  • 4. Concept of Super Multiplier • Mathematical derivation of the interaction of multiplier and accelerator • It explains the combine effect of multiplier and accelerator on equilibrium income, output and employment. • Due to the inclusion of induced investment demand , super multiplier will be greater than simple multiplier • According to Super multiplier , the total income in the economy will increase by KS times the initial increase in the autonomous investment.
  • 5. Mathematically, it is expressed as, where, ΔY = change in income ΔIa = change in autonomous investment Ks = Super multiplier
  • 6. Derivation of the equation