2020 (17), №3

Modelling the Multiplier-Accelerator Effects of Large Investment Projects



For citation: 

Eremin, V. V. (2020). Modelling the Multiplier-Accelerator Effects of Large Investment Projects. Zhurnal Economicheskoj Teorii [Russian Journal of Economic Theory], 17 (3), 574-588.


The aim of this study is to build a model of the occurrence and distribution of multiplier effects in the environment of economic agents, which includes modeling of the interaction between the multiplier and investment accelerator. In addition to assessment of direct effectiveness, this model can be applied to evaluate the indirect effectiveness of a large investment project — the growth in demand volumes (resulting from revenue growth) of economic entities that are not directly involved in this project. This methodology thus provides fuller data for a more precise evaluation of an investment project. The model takes into account the multiplier effects that occur in the process of managing a large investment project and makes its results more predictable. Our research uses a combination of graphical and mathematical methods, which allows us to model the distribution of multiplicative effects based on the analysis of their structure. We have derived formulae to determine the value of the multiplier and accelerator of investment at any stage of the distribution of multiplier effects among economic agents. We also propose a formula for calculating the value of the full investment multiplier, which takes into account the accelerator effect. In the future, it is planned to expand the basic model described in this work by adding models reflecting the dependence of inflation rates on the time of creation and launch of production capacities and models reflecting the relationship of inflation with the stages of the distribution of multiplier effects among economic agents.

Vladimir Vladimirovich Eremin — PhD in Economics, Leading Researcher of the Center for Monitoring and Evaluation of Economic Security, Institute for Economic Policy and Problems of Economic Security, Financial University under the Government of the Russian Federation (Moscow, Russian Federation; e-mail: villy.eremin@gmail.com).