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A HIERARCHIAL OPTIMIZATION PROCEDURE FOR MAGROECONOMIC POLICY MODELS
Author(s) -
Krouse Clement G.
Publication year - 1972
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1972.tb00193.x
Subject(s) - lexicographical order , economics , constraint (computer aided design) , mathematical optimization , set (abstract data type) , mathematical economics , preference , econometrics , scalar (mathematics) , mathematics , computer science , microeconomics , geometry , combinatorics , programming language
A bstract An area of difficulty in the effective application of econometric models to determine optimal macroeconomic policy is the specification of the welfare functional. In such models it is required to synthesize a scalar‐valued criterion which properly relates tho joint effects of various economic factors. This paper develops a systematic procedure for treating (his problem when the several variables of the criterion are set forth in preference by a lexicographic ordering. In capsule, the procedure gives sequential attention to the various factors, with the constraint set at a given optimization stage determined by the characteristics of the solution at all prior stages.