Cooperation between politicians and econometricians and the search for optimal economic policy

The problem of formalizing the cooperation between politicians and econometricians as an iterative—or trial and error—process, such that the weights in a preference function can be obtained in a finite number of steps, is considered. The approach is based on the pioneering suggestions made by Tinbergen and Frisch within the framework of a formal theory of economic policy. Using the implicit information given by a possible and implementable dialogue between a policy maker and a model builder it is shown that it is possible to take into account explicitly the interdependence between targets, instruments, and weights.