Control theory and econometric models

An algorithm for computing the relative maxima of objective functions constrained by nonlinear, nonconcave models is employed to analyze the behavior and policy implications of an intermediate size nonlinear econometric model. A behavioral test is constructed to determine which of the sets of point estimates of the unknown parameters are consistent with economic theory. The model´s evaluation of the effectiveness of monetary and fiscal policy versus fiscal policy is analyzed. An inflation test is constructed to evaluate the model´s realism.