Title :
Free choice and uncertainty in policy optimization with an econometric model
Author_Institution :
Carleton University, Ottawa, Canada
Abstract :
The use of dynamic optimization should be to guide, not to command the economic policymaker. This paper develops previous work on the Bank of Canada´s national econometric model RDX2, to define an indifference set for the optimal policy based on a confidence set for selected model disturbances and a sensitivity analysis of the calculated optimum. Within the indifference set a policy may be chosen on other grounds, and still represent whatever wisdom is embodied in the model and the optimization.
Keywords :
Cost function; Econometrics; Helium; Least squares methods; Mathematical model; Newton method; Optimal control; Predictive models; Recursive estimation; Uncertainty;
Conference_Titel :
Decision and Control, 1972 and 11th Symposium on Adaptive Processes. Proceedings of the 1972 IEEE Conference on
Conference_Location :
New Orleans, Louisiana, USA
DOI :
10.1109/CDC.1972.268968
