A trade-off criterion for evaluating effectiveness and reliability of alternative policy actions
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.
|Date of creation:||1988|
|Date of revision:|
|Publication status:||Published in Atti del Dodicesimo Convegno A.M.A.S.E.S. Palermo, 14-16 Settembre 1988 (1988): pp. 185-217|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
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"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.
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