The New Palgrave Dictionary of Economics

Living Edition
| Editors: Matias Vernengo, Esteban Perez Caldentey, Barkley J. Rosser Jr

Acceleration Principle

Living reference work entry

Latest version View entry history



The acceleration principle holds that the demand for capital goods is a derived demand and that changes in the demand for output lead to changes in the demand for capital stock and, hence, lead to investment. The flexible accelerator, which includes both demand and supply elements, allows for lags in the adjustment of the actual capital stock towards the optimal level. The principle neglects technological change but has been used successfully in explaining investment behaviour and cyclical behaviour in a capitalist economy. Almost all macroeconomic models of the economy employ some variant of it to explain aggregate investment.


Acceleration principle Aftalion, A. Aggregate demand Aggregate investment Business cycles Capital–output coefficient Chenery, H. B. Clark, J. M. Depreciation Derived demand Distributed lag accelerator Eisner, R. Expectations Haberler, G. Harrod, R. F. Harrod–Domar growth model Marx, K. H. Pigou, A.C. Technical change 

JEL Classifications

This is a preview of subscription content, log in to check access.


  1. Aftalion, A. 1913. Les crises périodiques de surproduction. Paris: Rivière.Google Scholar
  2. Chenery, H.B. 1952. Overcapacity and the acceleration principle. Econometrica 20 (1): 1–28.CrossRefGoogle Scholar
  3. Clark, J.M. 1917. Business acceleration and the law of demand: A technical factor in economic cycles. Journal of Political Economy 25: 217–235.CrossRefGoogle Scholar
  4. Eisner, R. 1960. A distributed lag investment function. Econometrica 28 (1): 1–29.CrossRefGoogle Scholar
  5. Eisner, R., and R. Strotz. 1963. Determinants of business investment. In Commission on money and credit, Impacts of monetary policy. Englewood Cliffs: Prentice-Hall.Google Scholar
  6. Haberler, G. 1937. Prosperity and depression. Geneva: League of Nations.Google Scholar
  7. Harrod, R.F. 1936. The trade cycle. Oxford: Oxford University Press.Google Scholar
  8. Junankar, P.N. 1972. Investment: Theories and evidence. London: Macmillan.CrossRefGoogle Scholar
  9. Knox, A.D. 1952. The acceleration principle and the theory of investment: A survey. Economica 19 (75): 269–297.CrossRefGoogle Scholar
  10. Koyck, L. 1954. Distributed lags and investment analysis. Amsterdam: North-Holland.Google Scholar
  11. Marx, K.H. 1863. Theories of surplus value, Part II. Moscow: Progress Publishers.Google Scholar
  12. Pigou, A.C. 1927. Industrial fluctuations. 2nd ed. London: Macmillan, 1929.Google Scholar

Authors and Affiliations

  1. 1.