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Linear Decision Rules for Economic Stabilization and Growth

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  • Charles C. Holt

Abstract

I. Introduction, 20. — II. A linear decision rule, 22; decision rule for static uncertainty, 23; decision rule for dynamic uncertainty, 25; plans, 28. — III. Simulation tests of the dynamic decision rule under uncertainty, 29; the policy of inaction, 30; decision rule stabilization with poor forecasts, 32; decision rule stabilization with perfect forecasts, 33; performance comparisons, 34; errors in estimating the economic relations and the welfare function, 38. — IV. Economic growth, 39. — V. Stabilization of an inherently unstable economy, 42. — VI. In conclusion, 43.

Suggested Citation

  • Charles C. Holt, 1962. "Linear Decision Rules for Economic Stabilization and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 76(1), pages 20-45.
    • Handle: RePEc:oup:qjecon:v:76:y:1962:i:1:p:20-45.
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    Cited by:

    1. Jean-Bernard Chatelain & Kirsten Ralf, 2020. "How macroeconomists lost control of stabilization policy: towards dark ages," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 27(6), pages 938-982, November.
    2. Haider A. Khan, 2004. "General Conclusions: From Crisis to a Global Political Economy of Freedom," Palgrave Macmillan Books, in: Global Markets and Financial Crises in Asia, chapter 9, pages 193-211, Palgrave Macmillan.
    3. David Kendrick & Hans Amman, 2006. "A Classification System for Economic Stochastic Control Models," Computational Economics, Springer;Society for Computational Economics, vol. 27(4), pages 453-481, June.
    4. Haider A. Khan, 2003. "The Future of Japanese Aid to South and Southeast Asia: A Comparative Analysis," CIRJE F-Series CIRJE-F-233, CIRJE, Faculty of Economics, University of Tokyo.
    5. David Kendrick, 1976. "Applications of Control Theory to Macroeconomics," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 2, pages 171-190, National Bureau of Economic Research, Inc.
    6. Khan, Haider A. & Dost, Ahmad Najim, 2015. "Japanese Foreign Aid, Development Expenditures and Taxation in Thailand 1960-2012:Econometric Results from a Bounded Rationality Model of Fiscal Behavior," MPRA Paper 66586, University Library of Munich, Germany.
    7. Christopher M. Adam, 1980. "Some Estimation Effects of Selecting Economic Policy Horizons for Macroeconomic Models," The Economic Record, The Economic Society of Australia, vol. 56(155), pages 374-377, December.
    8. Haider Khan, 2002. "Japanese Foreign Aid, Development Expenditures and Taxation in Thailand: Econometric Results from a Bounded Rationality Model of Fiscal Behavior," CIRJE F-Series CIRJE-F-188, CIRJE, Faculty of Economics, University of Tokyo.
    9. Ira N. Gang & Haider Ali Khan, 1999. "Foreign aid and fiscal behavior in a bounded rationality model: Different policy regimes," Empirical Economics, Springer, vol. 24(1), pages 121-134.
    10. Паламарчук Е.С., 2013. "Оценка Риска В Линейных Экономических Системах При Отрицательных Временных Предпочтениях," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 49(3), pages 99-116, июль.
    11. Haider Ali Khan, 2002. "How Effective Is Japanese Foreign Aid? Econometric Results from a Bounded Rationality Model for Indonesia," CIRJE F-Series CIRJE-F-164, CIRJE, Faculty of Economics, University of Tokyo.
    12. Felipe Morandé & Mauricio Tejada, 2008. "Sources of Uncertainty for Conducting Monetary Policy in Chile," Working Papers Central Bank of Chile 492, Central Bank of Chile.
    13. William Poole, 2008. "Rules-of-thumb for guiding monetary policy," Review, Federal Reserve Bank of St. Louis, vol. 90(Jul), pages 447-498.
    14. Levi, Maurice D, 1975. "Buffer Stocks, Aggregate Activity, and Economic Policy," Economic Inquiry, Western Economic Association International, vol. 13(1), pages 71-80, March.
    15. George M. Von Furstenberg & James M. Boughton, 1973. "Stabilization Goals and the Appropriateness of Fiscal Policy During the Eisenhower and Kennedy-Johnson Administrations," Public Finance Review, , vol. 1(1), pages 5-28, January.
    16. Khan, Haider, 2024. "Japanese Aid and Economic Development of Bangladesh," MPRA Paper 119877, University Library of Munich, Germany.
    17. Havvanur Feyza Erdem & George Tawadros, 2020. "Estimating An Optimal Macroeconomic Uncertainty Index For Australia," Working Papers 2020-02, DePauw University, School of Business and Leadership and Department of Economics and Management.
    18. Haider A. Khan, 2005. "Governance and Effectiveness of Japanese Aid: Towards Optimality," CIRJE F-Series CIRJE-F-331, CIRJE, Faculty of Economics, University of Tokyo.
    19. Ronald Davis & Dallas Denery & David Kendrick & Raman Mehra, 2012. "Introduction to the Works of Rodney C. Wingrove: Engineering Approaches to Macroeconomic Modeling," Computational Economics, Springer;Society for Computational Economics, vol. 39(1), pages 71-76, January.
    20. Kendrick, David A., 2005. "Stochastic control for economic models: past, present and the paths ahead," Journal of Economic Dynamics and Control, Elsevier, vol. 29(1-2), pages 3-30, January.
    21. Johnson, S.R. & Rausser, Gordon C., 1977. "PART III. Systems Analysis and Simulation in Agricultural and Resource Economics," AAEA Monographs, Agricultural and Applied Economics Association, number 337223, january.
    22. Kowalski, Tadeusz, 2002. "The Simonian bounded rationality hypothesis and the expectation formation mechanism," MPRA Paper 33981, University Library of Munich, Germany.

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