Macroeconomic modeling for control

This paper describes briefly the modeling of the United Kingdom economy in the least complex structural form allowable for the application of modern control techniques. The method employed is a blend of the "black box" approach where no knowledge of the inner mechanism is assumed and the classical approach of econometrics where economic theory is used to determine structure. The technique is illustrated in detail by means of a numerical example consisting of a four-equation sector of a larger model in which a full treatment of error is given. This serves to reveal to engineers the difficulties of econometrics, demonstrating the many pit-falls and acute problems that prevent a straightforward application of the methods of control theory.