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Accelerator coefficient

Updated: Aug 20, 2021

The amount of additional capital stock required to produce a unit increase in sales. A key element in the acceleration principle, this is the coefficient which relates the level of investment to the change in sales.

Accelerator coefficient

where V is the accelerator coefficient. Thus, the value of V tells us the strength of the effect that a change in output or sales will have on the leve! of invest­ment. The simplest form of the theory takes V as a constant determined basically by technology. However, we might also expect V to be affected by interest rates, wage rates and the degree of capacity utilization.

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James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.