Obstacles To Optimal Policy

This book provides a unified approach for the study of constrained Markov decision processes with a finite state space and unbounded costs. Unlike the single controller case considered in many other books, the author considers a single controller with several objectives, such as minimizing delays and loss, probabilities, and maximization of throughputs. It is desirable to design a controller that minimizes one cost objective, subject to inequality constraints on other cost objectives. This framework describes dynamic decision problems arising frequently in many engineering fields. A thorough overview of these applications is presented in the introduction. The book is then divided into three sections that build upon each other.

Public policy can be considered a design science. It involves identifying relevant problems, selecting instruments to address the problem, developing institutions for managing the intervention, and creating means of assessing the design. Policy design has become an increasingly challenging task, given the emergence of numerous ‘wicked’ and complex problems. Much of policy design has adopted a technocratic and engineering approach, but there is an emerging literature that builds on a more collaborative and prospective approach to design. This book will discuss these issues in policy design and present alternative approaches to design.

We consider a general class of nonlinear optimal policy problems involving forward-looking constraints (such as the Euler equations that are typically present as structural equations in DSGE models), and show that it is possible, under regularity conditions that are straightforward to check, to derive a problem with linear constraints and a quadratic objective that approximates the exact problem. The LQ approximate problem is computationally simple to solve, even in the case of moderately large state spaces and flexibly parameterized disturbance processes, and its solution represents a local linear approximation to the optimal policy for the exact model in the case that stochastic disturbances are small enough. We derive the second-order conditions that must be satisfied in order for the LQ problem to have a solution, and show that these are stronger, in general, than those required for LQ problems without forward-looking constraints. We also show how the same linear approximations to the model structural equations and quadratic approximation to the exact welfare measure can be used to correctly rank alternative simple policy rules, again in the case of small enough shocks.

This book from the Centre for Economic Policy Research deals with the implications of the exchange rate regimes and capital flows of the 1990s for government macroeconomic policy-making and EC policy co-ordination.

The annual conference on Neural Information Processing Systems (NIPS) is the flagship conference on neural computation. These proceedings contain all of the papers that were presented.

At the beginning of the twentieth century, Venezuela had one of the poorest economies in Latin America, but by 1970 it had become the richest country in the region and one of the twenty richest countries in the world, ahead of countries such as Greece, Israel, and Spain. Between 1978 and 2001, however, Venezuela’s economy went sharply in reverse, with non-oil GDP declining by almost 19 percent and oil GDP by an astonishing 65 percent. What accounts for this drastic turnabout? The editors of Venezuela Before Chávez, who each played a policymaking role in the country’s economy during the past two decades, have brought together a group of economists and political scientists to examine systematically the impact of a wide range of factors affecting the economy’s collapse, from the cost of labor regulation and the development of financial markets to the weakening of democratic governance and the politics of decisions about industrial policy. Aside from the editors, the contributors are Omar Bello, Adriana Bermúdez, Matías Braun, Javier Corrales, Jonathan Di John, Rafael Di Tella, Javier Donna, Samuel Freije, Dan Levy, Robert MacCulloch, Osmel Manzano, Francisco Monaldi, María Antonia Moreno, Daniel Ortega, Michael Penfold, José Pineda, Lant Pritchett, Cameron A. Shelton, and Dean Yang.

The launch of European Monetary Union (EMU) marked the beginning of a new era, and its establishment has proved an impressive success at the technical, legal, and procedural level. After all, EMU has accelerated economic and political integration in the European Union and tied the economies of the Member States closer together. However, the performance of the euro, high unemployment rates, uneven output and investment growth, and the issue of structural reforms that have yet to be tackled have raised questions about the performance of EMU in practice. There is a general consensus on the justification for economic policy coordination. The existing literature on economic policy coordination, however, seems far from able to provide robust conclusions about how to organize the necessary interaction of institutions and policies. Therefore, there seems to be a case for re-examining the subject under the new framework set by EMU. The objective of such a reassessment is to enhance the understanding of what type of coordination and what institutional setting for policy coordination can be expected to be most favorable. Challenges for Economic Policy Coordination within European Monetary Union provides an intellectually stimulating contribution to the ongoing debate.

This textbook addresses the main economic principles required by agricultural economists involved in rural development. The principles of 'micro-economics' or 'price-theory' are of relevance to economists everywhere, but this book reinforces the message of their relevance for rural development by explaining the theory in the specific context of the agricultural and food sectors of developing countries. Hypothetical and actual empirical illustrations drawn almost exclusively from such countries distinguish this book from other economic principles texts that draw their examples almost invariably from industrialised countries, and also from books more oriented to the issue of rural development. The first half of the book deals with the underlying principles of production, supply and demand. These are essential tools for the study and management of the agricultural sector and food markets. In the second half, supply and demand are bought together into a chapter of equilibrium and exchange. This is followed by chapters on trade and the theory of economic welfare. In the final chapter it is shown that much of the material in the earlier chapters can be combined by agricultural economists into a system for analysing and comparing the effects of alternative agricultural policies. The ability of agricultural economics to provide a consistent framework for the analysis of policy problems thus enables it to make a key contribution to rural development.