Springer Nature is making SARS-CoV-2 and COVID-19 research free. View research | View latest news | Sign up for updates

Retracing the preferences behind macroeconomic policy: The dutch experience

  • 23 Accesses

  • 6 Citations


The 1986 Central Economic Plan for The Netherlands presents a combination of policy adjustments which is considered to lead to a more satisfactory outcome for the Dutch economy than the central projection for the period up to 1990. This study is an attempt to reconstruct the preferences behind the alternative scenario as a starting point for optimisation exercises. It turns out that reducing the government deficit receives the highest priority, while economic growth has a relatively low weight. A further analysis suggests that, to some degree, the high priority to improving the government budget may be due to risk aversion. At relatively low cost in terms of the other target variables, unemployment could be reduced by creating more public sector employment, the main drawback being a fall in disposable income per employee.

This is a preview of subscription content, log in to check access.


  1. Ancot, J.P. and A.J. Hughes Hallett, ‘Establishing Public Preferences for Coalition Government: An Empirical Study in Economic Planning Behaviour,’De Economist, 132 (1984), pp. 153–170.

  2. Ancot, J.P., A.J. Hughes Hallett and J.H.P. Paelinck, ‘The Determination of Implicit Preferences: Two Possible Approaches Compared,’European Economic Review, 18 (1982), pp. 267–289.

  3. Berg, P.J.C.M. van den, G.M.M. Gelauff and V.R. Okker, ‘The FREIA-KOMPAS Model for the Netherlands: A Quarterly Macroeconomic Model for the Short and Medium Term,’Economic Modelling, 5 (1988), pp. 170–236.

  4. Boot, J.C.G.,Quadratic Programming, Amsterdam, 1964.

  5. Brandsma, A.S., ‘Risk Reduction and the Robustness of Economic Policies,’ in: C. Carraro and D. Sartore (eds.),Developments of Control Theory for Economic Analysis, Dordrecht, 1987.

  6. Brandsma, A.S., A.J. Hughes Hallett and N. van der Windt, ‘Optimal Control of Large Nonlinear Models: An Efficient Method of Policy Search Applied to the Dutch Economy,’Journal of Policy Modeling, 5 (1983), pp. 253–270.

  7. Central Planning Bureau,Centraal Economisch Plan 1986, The Hague, 1986.

  8. Don, F.J.H. and G.M. Gallo, ‘Solving Large Sparse Systems of Equations,’Journal of Forecasting, 6 (1987), pp. 167–180.

  9. Eijk, C.J. van and J. Sandee, ‘Quantitative Determination of an Optimum Economic Policy,’Econometrica, 27 (1959), pp. 1–13.

  10. Friedlaender, A.F., ‘Macro Policy Goals in the Postwar Period: A Study in Revealed Preference,’Quarterly Journal of Economics, 87 (1973), pp. 25–43.

  11. Geest, L. van der, ‘Het vastleggen van economisch-politieke oordelen in een doelstellingsfunctie,’Economisch-Statistische Berichten, 62 (1977), pp. 994–999.

  12. Gelauff, G.M.M. and V.R. Okker, ‘ZOEM, a Condensed Version of the FK Model of the Dutch Economy,’ forthcoming as Research Memorandum, Central Planning Bureau, The Hague, 1988.

  13. Hughes Hallett, A.J., ‘Wage Policy, Competitiveness and Risk Management: The Internal Conflicts of Dutch Economic Policy,’Weltwirtschaftliches Archiv, 121 (1985), pp. 703–721.

  14. Johansen, L., ‘Establishing Preference Functions for Macroeconomic Decision Models,’European Economic Review, 5 (1974), pp. 41–65.

  15. Kuhn, H.W. and A.W. Tucker (eds.), ‘Linear Inequalities and Related Systems,’ Annual Mathematical Studies no. 38, Princeton, 1956.

  16. Merkies, A.H.Q.M. and T.E. Nijman, ‘The Measurement of Quadratic Preference Functions with Small Samples,’Kwantitatieve Methoden, 2 (1981), pp. 143–162.

  17. Meulendijks, P., ‘Calcul de la fonction de préférence,’ Technique économique et humaine, Vers une démarche opération, Centre dc Récherches Economiques et Sociales, Namur, 1972, pp. 147–218.

  18. Nijkamp, P. and W.H. Somermeyer, ‘Explicating Implicit Social Preference Functions,’Economics of Planning, 11 (1971), pp. 101–119.

  19. Ploeg, F. van der, ‘Economic Policy Rules for Risk-sensitive Decision Making,’Zeitschrift für Nationalökonomie, 44 (1984), pp. 207–235.

  20. Schim van der Locff, S. and R. Harkema, ‘A Multiperiod Revealed Preference Approach to Estimating Preference Functions under Rational Random Behaviour,’ Report 7925/E, Econometric Institute, Erasmus University Rotterdam, 1979.

  21. Schrijver, A.M.A., ‘Analyse van macro-economische beleidspreferenties met behulp van optimale besturingstheorie,’ Research Memorandum no. 35, Central Planning Bureau, The Hague, 1987.

  22. Siebrand, J.C., ‘Macroeconomic Modelling for Economic Policy,’ Paper presented at the Economic Modelling Conference, Amsterdam, 1987.

  23. Siebrand, J.C. and N. van der Windt, ‘Economic Crisis and Economic Policy in the Thirties and the Seventies,’De Economist, 131 (1983), pp. 517–547.

  24. Viaene, J.M., ‘A Lexicographic Ordering in Policy Optimisation Methods,’ Erasmus University Rotterdam, 1987 (mimeo).

  25. Wallis, K.F. (ed.), M.J. Andrews, D.N.F. Bell, P.G. Fisher and J.D. Whitley,Models of the UK Economy. A Second Review by the ESRC Macroeconomic Modelling Bureau, Oxford, 1985.

Download references

Author information

Additional information

This paper has grown out of the master's thesis of Annette Schrijver for the Technical University of Delft, which she wrote at the Central Planning Bureau. We have benefited from discussions with many colleagues. In particular we like to thank H. den Hartog, F.J.H. Don and V.R. Okker. The responsibility for the contents of this article rests entirely with the authors.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Brandsma, A.S., Gelauff, G.M.M. & Hanzon, B. Retracing the preferences behind macroeconomic policy: The dutch experience. De Economist 136, 468–490 (1988).

Download citation


  • Public Sector
  • Risk Aversion
  • Main Drawback
  • Disposable Income
  • Target Variable