Designing Efficient Policies in a Regional Economy. A MCDM-CGE Approach
Since policy makers usually pursue several conflicting objectives, policy making can be understood as a multicriteria decision problem. Following the methodological proposal in André and Cardenete (2005), we use multiobjective programming in connection with a computable general equilibrium model to represent optimal policy making and to get so-called efficient policies in an application to a regional economy (Andalusia, Spain). We illustrate the solution of two bicriteria problems (unemployment vs. inflation and growth vs. unemployment) from which we get a new reading of two classical results: the Phillips curve and the Okun law. Finally, we enlarge the scope of the exercise by solving a problem with five objectives and discuss the efficient solutions that can be obtained in this context.
|Date of creation:||2006|
|Date of revision:|
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- 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,
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- Francisco J. André & M. Alejandro Cardenete & Esther Velázquez Alonso, 2004. "Performing an Environmental Tax Reform in a Regional Economy. A Computable General Equilibrium Approach," Economic Working Papers at Centro de Estudios Andaluces E2004/04, Centro de Estudios Andaluces.
- Francisco J. AndrÃ© & M. Alejandro Cardenete, 2004. "Performing an Environmental Tax Reform in a Regional Economy: A Computable General Equilibrium Approach," Computing in Economics and Finance 2004 115, Society for Computational Economics.
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"An evaluation of the performance of an applied general equilibrium model of the Spanish economy,"
480, Federal Reserve Bank of Minneapolis.
- 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 115-41, June.
- Shoven,John B. & Whalley,John, 1992.
"Applying General Equilibrium,"
Cambridge University Press, number 9780521266550, june. pag.
- M. Alejandro Cardenete & Ferran Sancho, 2002. "An Applied General Equilibrium Model to Assess the Impact of National Tax Changes on a Regional Economy," Economic Working Papers at Centro de Estudios Andaluces E2002/13, Centro de Estudios Andaluces.
- 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.
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