The Quality of Quantitative Economic Policy-making when Targets and Costs of Change are Mis-specified

  • Arnold Zellner


In a series of well-known works [3], [4], [5], [6], Tinbergen has made pioneering and outstanding contributions to the theory and application of quantitative economic policy-making (Q.E.P.).Tinbergen’s approach to Q.E.P. involves the following elements: (a) a criterion or welfare function that depends on certain economic variables, (b) a classification of variables into categories, target and non-target endogenous variables and instrumental and non-instrumental exogenous variables, (c) an econometric model involving relationships for variables and (d) boundary conditions for selected variables. Within this framework, which resembles closely the framework of modern control theory, Tinbergen provided simple, operational procedures for solving for values of policy instrument variables at a time when modern control theory was in its infancy.


Loss Function Criterion Function Expected Loss Positive Definite Symmetric Matrix International Economic Review 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. [1]
    Fisher, W., ‘Estimation in the Linear Decision Model’, International Economic Review in (January 1962) 1–29.Google Scholar
  2. [2]
    Prescott, E. C., ‘Adaptive Decision Rules for Macro Economic Planning’, unpublished doctoral dissertation, Graduate School of Industrial Administration, Carnegie-Mellon University, 1967.Google Scholar
  3. [3]
    Tinbergen, J., Centralization and Decentralization in Economic Policy, (Amsterdam: North-Holland Publishing Co., 1954).Google Scholar
  4. [4]
    Tinbergen, J., On the Theory of Economic Policy, 2nd ed., (Amsterdam: North-Holland Publishing Co., 1955).Google Scholar
  5. [5]
    Tinbergen, J., Economic Policy: Principles and Design, (Amsterdam: North-Holland Publishing Co., 1956).Google Scholar
  6. [6]
    Tinbergen, J., Central Planning, (New Haven/London: Yale University Press, 1964).Google Scholar
  7. [7]
    Van Eijk, C. J. and Sandee, J., ‘Quantitative Determination of an Optimum Economic Policy’, Econometrica, XXVII (January 1959) 1–13.CrossRefGoogle Scholar
  8. [8]
    Wan, H. Y., ‘Optimal Saving Programs under Inter-temporally Dependent Preferences’, International Economic Review, XI (October 1970) 521–47.Google Scholar
  9. [9]
    Zellner, A. and Geisel, M. S., ‘Sensitivity of Control to Uncertainty and Form of the Criterion Function’, in The Future of Statistics, ed. D. G. Watts (New York: Academic Press, 1968, 269–89).Google Scholar
  10. [10]
    Zellner, A., An Introduction to Bayesian Inference in Econometrics, (New York: John Wiley and Sons, Inc., 1971).Google Scholar

Copyright information

© Arnold Zellner 1974

Authors and Affiliations

  • Arnold Zellner
    • 1
  1. 1.Department of EconomicsUniversity of California at BerkeleyUSA

Personalised recommendations