Designing Efficient Policies in a Regional Economy. A MCDM-CGE Approach
Francisco J. André
M. Alejandro Cardenete Flores
Since policy makers usually pursue several conflicting objectives, policy making can be understood as a multicriteria decision problem. Following the methodological proposal in André and Cardenete (2005), we use multiobjective programming in connection with a computable general equilibrium model to represent optimal policy making and to get so-called efficient policies in an application to a regional economy (Andalusia, Spain). We illustrate the solution of two bicriteria problems (unemployment vs. inflation and growth vs. unemployment) from which we get a new reading of two classical results: the Phillips curve and the Okun law. Finally, we enlarge the scope of the exercise by solving a problem with five objectives and discuss the efficient solutions that can be obtained in this context.
Public Policy, Multicriteria Decision Making, Computable General Equilibrium Model, Efficient Policy.
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