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Modeling Individuals' Behavior: Evaluation of a Policymaker's Tool

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  • Alan L. Gustman

Abstract

With a continuous decline in the cost of manipulating data and a continuous increase in the richness of data banks, policymakers have increasing opportunities to build and apply so-called micro-simulation models--modelsthat attempt to simulate the behavior of the individuals in a large population under a specified program. The efforts of the Department of Labor to use a model in evaluating proposed changes in the unemployment insurance system point up both the power and the weaknesses of such models. Any user who applies these models without attempting to understand which of their strengths and weaknesses are most important for analyzing the problem at hand is asking for trouble. Easy to use or not,these models are not user friendly.

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  • Alan L. Gustman, 1983. "Modeling Individuals' Behavior: Evaluation of a Policymaker's Tool," NBER Working Papers 1223, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:1223 Note: LS
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    1. Mishkin, Frederic S, 1982. "Does Anticipated Monetary Policy Matter? An Econometric Investigation," Journal of Political Economy, University of Chicago Press, vol. 90(1), pages 22-51, February.
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    3. William Poole, 1969. "Optimal choice of monetary policy instruments in a simple stochastic macro model," Special Studies Papers 2, Board of Governors of the Federal Reserve System (U.S.).
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    5. Franz, Wolfgang, 1983. "The past decade's natural rate and the dynamics of german unemployment: A case against demand policy?," European Economic Review, Elsevier, vol. 21(1-2), pages 51-76.
    6. Robert J. Barro & Mark Rush, 1980. "Unanticipated Money and Economic Activity," NBER Chapters,in: Rational Expectations and Economic Policy, pages 23-73 National Bureau of Economic Research, Inc.
    7. Gordon, Robert J, 1975. "The Demand for and Supply of Inflation," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 807-836, December.
    8. Fellner, William, 1982. "Criteria for Useful Targeting: Money versus the Base and Other Variables," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 14(4), pages 641-660, November.
    9. Sargent, Thomas J & Wallace, Neil, 1975. ""Rational" Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 241-254, April.
    10. William Poole, 1970. "Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model," The Quarterly Journal of Economics, Oxford University Press, vol. 84(2), pages 197-216.
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    12. Sims, Christopher A, 1972. "Money, Income, and Causality," American Economic Review, American Economic Association, vol. 62(4), pages 540-552, September.
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    1. Gustman, Alan L & Steinmeier, Thomas L, 1986. "A Disaggregated, Structural Analysis of Retirement by Race, Difficulty of Work and Health," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 509-513, August.

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