Abstract
Zoutendijk's method of feasible directions is used in this paper to derive numerical control strategies for the United Kingdom economy. The way in which the algorithm permits an examination of the sensitivity of the optimum short-term economic policy to changes in various assumptions demonstrates the versatility of the algorithm. Examined are the implications of different forms for the social welfare function; altering the length of the planning horizon, varying the magnitude of the terminal capital constraint, reducing the maximum permitted level of unemployment, changing the initial endowment of foreign currency reserves, fixing the interest rate for the whole planning period, and imposing a minimum growth rate for public expenditure.
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Communicated by P. Varaiya
This work was supported in part by the National Science Foundation, Grant No. GK-10656X7.
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Livesey, D.A. Feasible directions in economic policy. J Optim Theory Appl 25, 383–406 (1978). https://doi.org/10.1007/BF00932901
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DOI: https://doi.org/10.1007/BF00932901