Cookies?
Library Header Image
LSE Research Online LSE Library Services

Economic policy when models disagree

Barrieu, Pauline and Desgagne, Bernard Sinclair (2009) Economic policy when models disagree. Centre for Climate Change Economics and Policy and Grantham Research Institute on Climate Change and the Environment (4). Centre for Climate Change Economics and Policy and Grantham Research Institute on Climate Change and the Environment, London, UK.

[img]
Preview
PDF
Download (756kB) | Preview

Abstract

This paper proposes a general way to conceive public policy when there is no consensual account of the situation of interest. The approach builds on an extension and dual formulation of the traditional theory of economic policy. It does not need a representative policymaker’s utility function (as in the literature on ambiguity), a reference model (as in robust control theory) or some prior probability distribution over the set of supplied scenarios (as in Bayesian model-averaging). The method requires instead that the willingness to accept a policy’s projected outcomes coincide with the willingness to pay to correct the current situation. Policies constructed in this manner are shown to be e ective, robust and simple in a precise and intuitive sense.

Item Type: Monograph (Working Paper)
Official URL: http://www2.lse.ac.uk/GranthamInstitute/Home.aspx
Additional Information: © 2009 The Author
Divisions: Grantham Research Institute
Statistics
Centre for Analysis of Time Series
Subjects: H Social Sciences > HB Economic Theory
JEL classification: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods and Programming > C60 - General
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D80 - General
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
Date Deposited: 26 Jul 2011 15:23
Last Modified: 15 Sep 2023 23:18
URI: http://eprints.lse.ac.uk/id/eprint/37607

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics