Abstract
This paper presents an evaluation of an economic policy optimization experiment using interactive methods of vector optimization. A medium sized nonlinear macroeconometric model for Austria is transformed to yield a set of linear constraints for macroeconomic policy optimization using a set of mainly fiscal and monetary instruments. To assess the practical impact of different methods and their implementation to support macroeconomic decision making, four techniques of vector optimization have been tested with participants in an experimental economic planning problem for the year 1989. The techniques based on linear programming are applied interactively and differ from each other in the information requirements and the conduct of the interaction. We consider the Step-Method (Benayoun et al. (1971)), Interactive Multiple Goal Programming (Spronk (1981)), a method proposed by Zionts and Wallenius (1976) — all contained in the optimization program IAO — together with the reference point approach, implemented in DIDAS (developed and provided to us by the International Institute of Applied Systems Analysis, Laxenburg). People involved in practical economic policy decision making for Austria have been invited to participate in the experiment. Among them were members of the chamber of commerce, the ministry of finance, the national bank and members of the national council. A survey of the results achieved and a critical comparative evaluation is presented.
We would like to thank M. Luptáčik and P. Müller for discussion and J. Gruber for helpful comments to improve the paper.
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Böhm, B., Brandner, P. (1991). Optimal Economic Policy Making With an Econometric Model Using Interactive Methods of Vector Optimization. In: Gruber, J. (eds) Econometric Decision Models. Lecture Notes in Economics and Mathematical Systems, vol 366. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-51675-7_10
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DOI: https://doi.org/10.1007/978-3-642-51675-7_10
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