The Rocking Horse That Never Rocked: Frisch's "Propagation and Impulse Problem"

Propagation Problems and Impulse Problems in Dynamic Economics (Frisch, 1933) is one of the most influential papers in the development of econometrics, mathematical economics and business cycle analysis. In the present article it is claimed that Propagation Problems and Impulse Problems contains a fundamental blunder that has been unseen, regardless of the many reviews and of the importance of Frisch work, for more than 60 years. Most likely a prompt acknowledgment of this slip would have had a serious impact on the exchanges that Frisch had with J.M.Clark, Kalecki and Schumpeter and hence on the development of economic analysis. Why the gross error present in Propagation Problems and Impulse Problems went unnoticed for more than 60 years should be of interest to scholars of mathematical economics, business cycle theory and history of economic thought.