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A trade-off criterion for evaluating effectiveness and reliability of alternative policy actions

Author

Listed:
  • Bianchi, Carlo
  • Brillet, Jean-Louis
  • Calzolari, Giorgio

Abstract

The evaluation of policy actions by means of macroeconomic models often begins with the analysis of multipliers. A rough analysis recommends to use those instruments that exhibit large multipliers. Government budget usually imposes some constraints on the policy action. Insted of the raw multiplier, a trade-off criterion could measure the effect of a variation of the instrument associated with a given cost in terms of government deficit. The trade-off criterion can be computed from the macroeconomic model, and this paper shows how to associate a standard error to the point estimate, thus providing a measurement of reliability of the policy instrument.

Suggested Citation

  • Bianchi, Carlo & Brillet, Jean-Louis & Calzolari, Giorgio, 1988. "A trade-off criterion for evaluating effectiveness and reliability of alternative policy actions," MPRA Paper 23869, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:23869
    as

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    File URL: https://mpra.ub.uni-muenchen.de/23869/1/MPRA_paper_23869.pdf
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    References listed on IDEAS

    as
    1. Bianchi, Carlo & Calzolari, Giorgio & Corsi, Paolo, 1981. "Estimating asymptotic standard errors and inconsistencies of impact multipliers in nonlinear econometric models," Journal of Econometrics, Elsevier, vol. 16(3), pages 277-294, August.
    2. Bianchi, Carlo & Brillet, Jean-Louis & Calzolari, Giorgio, 1984. "Analyse et mesure de l'incertitude en prevision d'un modele econometrique. Application au modele mini-DMS
      [Analysis and measurement of forecast uncertainty in an econometric model. Application to m
      ," MPRA Paper 22565, University Library of Munich, Germany, revised 1984.
    3. Brundy, James M & Jorgenson, Dale W, 1971. "Efficient Estimation of Simultaneous Equations by Instrumental Variables," The Review of Economics and Statistics, MIT Press, vol. 53(3), pages 207-224, August.
    4. Amemiya, Takeshi, 1983. "Non-linear regression models," Handbook of Econometrics,in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 1, chapter 6, pages 333-389 Elsevier.
    5. James M. Brundy & Dale W. Jorgenson, 1971. "Efficient estimation of simultaneous equations by instrumental variables," Working Papers in Applied Economic Theory 3, Federal Reserve Bank of San Francisco.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Trade-off criterion; multipliers; standard errors of multipliers; large scale econometric model; French economy;

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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