Title :
Optimal decision and control policies in the national economy
Author :
Erickson, D.L. ; Leondes, C.T. ; Norton, F.E.
Author_Institution :
McDonnell-Douglas Astronautics Company Western Division, California
Abstract :
This paper discusses the application of sensitivity constrained optimal control theory to a dynamic model of the U.S. national economy as the foundation of a useful prescriptive macroeconomic model. Two optimal control policies are formulated and solved. The first, or primary optimal control problem, is constrained by system state dynamics only. The second, or sensitivity constrained optimal control problem, is constrained by economic state dynamics as well as state trajectory sensitivity to parameter deviations from nominal. Numerical results suggest that in general economic state trajectory sensitivity may be reduced by decreasing federal government purchases of goods and services and increasing the supply of money over their respective optimal levels when state sensitivity to parameter variations is not considered. Further, although state sensitivity may be reduced to an arbitrarily small level, it is relatively costly to do so using federal government spending and money supply as the control media.
Keywords :
Companies; Constraint theory; Economic forecasting; Economic indicators; Equations; Macroeconomics; Optimal control; Predictive models; Symmetric matrices; US Government;
Conference_Titel :
Adaptive Processes (9th) Decision and Control, 1970. 1970 IEEE Symposium on
Conference_Location :
Austin, TX, USA
DOI :
10.1109/SAP.1970.269986