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Economic Policy Formulation in a Large-scale Model

  • T. S. Barker
Chapter

Abstract

Methods of controlling econometric models have been developed mainly for small-scale linear models, usually for the purpose of demonstrating the power and potential application of control techniques. In the practice of economic management, however, the models used are often very large and nearly always nonlinear. This paper presents a method of formulating dynamic policies in a large-scale model, basically by adapting Tinbergen’s targets-instruments approach (1963, 1966). The method is not intended to produce an optimal solution but rather a series of alternative solutions or strategies for economic policy, with different combinations of targets and instruments. The intention is to narrow down the feasible and sensible range of policies which are worth thorough and detailed exploration. The method is illustrated by an application to the Cambridge Growth Project’s multisectoral dynamic model of the UK economy.

Keywords

Exchange Rate Econometric Model Planning Period Export Price Dynamic Policy 
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References

  1. T. S. Barker (1976) (ed.), Economic Structure and Policy (Chapman & Hall, London).Google Scholar
  2. T. S. Barker (1978), ‘Towards strategic paths in economic planning in J. R. N. Stone and W. Peterson, (ed.), Econometric Contributions to Public Policy (Macmillan, London).Google Scholar
  3. D. A. Livesey (1976), ‘Solving the model’ Chapter 3 in Barker, Economic Structure and Policy, above.Google Scholar
  4. A. J. Preston (1974), ‘A dynamic generalisation of Tinbergen’s theory of policy’, Review of Economic Studies, no. 125 (Jan) pp. 65–74.Google Scholar
  5. J. Tinbergen (1963), On the Theory of Economic Policy (North Holland, 2nd ed.).Google Scholar
  6. J. Tinbergen (1966), Economic Policy: Principles and Design (North Holland).Google Scholar

Copyright information

© T. S. Barker 1979

Authors and Affiliations

  • T. S. Barker

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