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Multicriteria Policy Making. Defining Efficient Policies in a General Equilibrium Model

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Abstract

We propose to model policy making as a multicriteria problem and solve it using suitable multicriteria techniques in connection with some structural economic model to represent optimal policy making and to get useful policy recommendations. By using a multiobjective approach combined with a Computable General Equilibrium model, we propose the concept of efficient policy and calculate the set of efficient policies for the Spanish economy in an empirical exercise. This approach allows us to quantify the trade-off between growth and inflation, to measure the efficiency of the actually applied fiscal policy and to get some plausible modifications that could foster policy efficiency in practice.

Suggested Citation

  • Francisco J. André & Manuel Alejandro Cardenete, 2005. "Multicriteria Policy Making. Defining Efficient Policies in a General Equilibrium Model," Economic Working Papers at Centro de Estudios Andaluces E2005/04, Centro de Estudios Andaluces.
  • Handle: RePEc:cea:doctra:e2005_04
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    References listed on IDEAS

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    1. Kehoe, Timothy J & Polo, Clemente & Sancho, Ferran, 1995. "An Evaluation of the Performance of an Applied General Equilibrium Model of the Spanish Economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 6(1), pages 115-141, June.
    2. Francisco André & M. Cardenete & Esther Velázquez, 2005. "Performing an environmental tax reform in a regional economy. A computable general equilibrium approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 39(2), pages 375-392, June.
    3. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    4. Ballard, Charles L. & Fullerton, Don & Shoven, John B. & Whalley, John, 2009. "A General Equilibrium Model for Tax Policy Evaluation," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226036335, December.
    5. Dawkins, Christina & Srinivasan, T.N. & Whalley, John, 2001. "Calibration," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 58, pages 3653-3703 Elsevier.
    6. M. Alejandro Cardenete & Ferran Sancho, 2004. "El marco del SEC95 y las matrices de contabilidad social: España 1995," Economic Working Papers at Centro de Estudios Andaluces E2004/03, Centro de Estudios Andaluces.
    7. Hannele Wallenius & Jyrki Wallenius & Pentti Vartia, 1978. "An Approach to Solving Multiple Criteria Macroeconomic Policy Problems and an Application," Management Science, INFORMS, vol. 24(10), pages 1021-1030, June.
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    Cited by:

    1. Francisco Javier André García & M. Alejandro Cardenete Flores, 2008. "Políticas económicas y ambientales eficientes en un contexto de equilibrio general aplicado," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 67(01), pages 72-91.
    2. Francisco J. André & M. Alejandro Cardenete Flores, 2006. "Designing Efficient Policies in a Regional Economy. A MCDM-CGE Approach," Economic Working Papers at Centro de Estudios Andaluces E2006/03, Centro de Estudios Andaluces.

    More about this item

    Keywords

    Public Policy; Multicriteria Decision Making; Efficient Frontier; Computable General Equilibrium Model.;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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