On optimal control and macroeconomic policy

Control theory has important contributions to make to the theory of macro-economic policy. These include a unified view of estimation, forecasting and control and a consequently clearer focus in identifying performance criteria. Further, the methods of control theory imply objectivity and a need for assumptions to be made explicit. By contrast, the UK lacks a research body for forecasting and policy evaluation detached from doctrinal or methodological commitment. Engineering control methods, however, diverge from those wholly acceptable to economic systems in that, in the latter, the controller is himself part of the system he controls and some of his controls operate only indirectly. A further difference is that economics cannot as yet furnish the controller with reliable models of system behaviour linking policy instruments to set targets.     

Economics and quantitative economics: A defence

The purpose of the paper is to discuss quantitative work in economics, especially in relation to problems of macro-economic policy. It is argued that many recent criticisms of economics are not well founded, and it is certainly not the case that what is wrong with economics is its quantitative bias. Quite the contrary; in a number of areas more quantitative work is required. The use of control theory methods should be welcomed by economists, but these need not be introduced to the exclusion of other methods. Finally, some suggestions are made for further research.