• Previous Article
    Average optimal strategies for zero-sum Markov games with poorly known payoff function on one side
  • JDG Home
  • This Issue
  • Next Article
    On the Euler equation approach to discrete--time nonstationary optimal control problems
January  2014, 1(1): 79-104. doi: 10.3934/jdg.2014.1.79

Optimal control indicators for the assessment of the influence of government policy to business cycle shocks

1. 

Department of Economics, Division of Mathematics-Informatics, National and Kapodistrian University of Athens, 8 Pesmazoglou Street, Athens, 105 59, Greece, Greece

Received  July 2012 Revised  October 2012 Published  June 2013

We consider idealised dynamic models isolating the relationship between GDP and government expenditures. In this setting we assess the possibility of smoothing the effect of business cycle shocks via government expenditure alone and propose optimal control indicators measuring the control potential of this government action. This provides with new indicators and indices refining the dynamic relationship obtained by ARMA or similar type of macro - modeling.
Citation: John Leventides, Iraklis Kollias. Optimal control indicators for the assessment of the influence of government policy to business cycle shocks. Journal of Dynamics & Games, 2014, 1 (1) : 79-104. doi: 10.3934/jdg.2014.1.79
References:
[1]

A. G. Malliaris and J. L. Urrutia, How big is the random walk in macroeconomic time series: Variance ratio tests,, Economic Uncertainty, (2005), 9.  doi: 10.1142/9789812701015_0002.  Google Scholar

[2]

C. Burnside and M. Eichenbaum, Factor Hoarding and the Propagation of Business Cycle Shocks,, American Economic Review, 86 (1996), 1154.   Google Scholar

[3]

C. R. Nelson and C. I. Plosser, Trends and random walks in macroeconomic time series: Some evidence and implications,, Journal of Monetary Economics, 10 (1982), 139.  doi: 10.1016/0304-3932(82)90012-5.  Google Scholar

[4]

D. E. W. Laidler, An elementary monetarist model of simultaneous fluctuations in prices and output,, in, 119 (1976), 75.  doi: 10.1007/978-3-642-46331-0_4.  Google Scholar

[5]

F. Canova, Detrending and business cycle facts,, Journal of Monetary Economics, 41 (1998), 475.  doi: 10.1016/S0304-3932(98)00006-3.  Google Scholar

[6]

F. E. Kydland and E. C. Prescott, Time to build and aggregate fluctuations,, Econometrica, 50 (1982), 1345.   Google Scholar

[7]

J.-O. Cho and T. F. Cooley, The business cycle with nominal contracts,, Economic Theory, 6 (1995), 13.  doi: 10.1007/BF01213939.  Google Scholar

[8]

J. B. Long, Jr. and C. I. Plosser, Real business cycles,, Journal of Political Economy, 91 (1983), 39.   Google Scholar

[9]

J. H. Stock and M. W. Watson, Does GNP have a unit root?,, Economics Letters, 22 (1986), 147.  doi: 10.1016/0165-1765(86)90222-3.  Google Scholar

[10]

J. Y. Campbell and N. G. Mankiw, Are output fluctuations transitory?,, The Quarterly Journal of Economics, 102 (1987), 857.  doi: 10.2307/1884285.  Google Scholar

[11]

L. J. Christiano and M. Eichenbaum, Current real-business cycle theories and aggregate labor-market fluctuations,, American Economic Review, 82 (1992), 430.   Google Scholar

[12]

L. J. Christiano and M. Eichenbaum, Unit roots in real GNP: Do we know and do we care?,, Carnegie-Rochester Conference Series on Public Policy, 32 (1990), 7.   Google Scholar

[13]

Lutz Arnold, "Business Cycle Theory,", Oxford University Press, (2002).  doi: 10.1093/acprof:oso/9780199256815.001.0001.  Google Scholar

[14]

M. Boldrin and M. Horvath, Labor contracts and business cycles,, Journal of Political Economy, 103 (1995), 972.  doi: 10.1086/262010.  Google Scholar

[15]

N. G. Mankiw and D. Romer, "New Keynesian Economics," Vols. 1 and 2,, Cambridge University Press, (1991).   Google Scholar

[16]

O. J. Blanchard and S. Fischer, "Lectures in Macroeconomics,", MIT Press, (1989).   Google Scholar

[17]

Philip R. Lane, The cyclical behaviour of fiscal policy: Evidence from the OECD,, Journal of Public Economics, 87 (2003), 2661.  doi: 10.1016/S0047-2727(02)00075-0.  Google Scholar

[18]

R. Cottle, J. Pang and R. Stone, "Linear Complimentarity Problem,", Classics in Applied Mathematics, (2009).   Google Scholar

[19]

R. E. Lucas, Jr., Econometric policy evaluation: A critique,, in, (1976), 19.  doi: 10.1016/S0167-2231(76)80003-6.  Google Scholar

[20]

R. E. A. Farmer and J.-T. Guo, Real business cycles and the animal spirits hypothesis,, Journal of Economic Theory, 63 (1994), 42.  doi: 10.1006/jeth.1994.1032.  Google Scholar

[21]

R. G. King and S. T. Rebelo, Resuscitating real business cycles,, in, (1999), 927.  doi: 10.1016/S1574-0048(99)10022-3.  Google Scholar

[22]

R. G. D. Allen, "Macroeconomic Theory: A Mathematical Treatment,", Macmillan, (1967).   Google Scholar

[23]

R. Neck, The Contribution of Control Theory to the Analysis of Economic Policy,, in, (2008), 6.   Google Scholar

[24]

V. R. Bencivenga, An econometric study of hours and output variation with preference shocks,, International Economic Review, 33 (1992), 449.  doi: 10.2307/2526904.  Google Scholar

[25]

S. Boyd and L. Vandenberghe, "Convex Optimization,", Cambridge University Press, (2004).   Google Scholar

[26]

T. Puu and I. Sushko, A business cycle model with cubic nonlinearity,, Chaos, 19 (2004), 597.  doi: 10.1016/S0960-0779(03)00132-2.  Google Scholar

show all references

References:
[1]

A. G. Malliaris and J. L. Urrutia, How big is the random walk in macroeconomic time series: Variance ratio tests,, Economic Uncertainty, (2005), 9.  doi: 10.1142/9789812701015_0002.  Google Scholar

[2]

C. Burnside and M. Eichenbaum, Factor Hoarding and the Propagation of Business Cycle Shocks,, American Economic Review, 86 (1996), 1154.   Google Scholar

[3]

C. R. Nelson and C. I. Plosser, Trends and random walks in macroeconomic time series: Some evidence and implications,, Journal of Monetary Economics, 10 (1982), 139.  doi: 10.1016/0304-3932(82)90012-5.  Google Scholar

[4]

D. E. W. Laidler, An elementary monetarist model of simultaneous fluctuations in prices and output,, in, 119 (1976), 75.  doi: 10.1007/978-3-642-46331-0_4.  Google Scholar

[5]

F. Canova, Detrending and business cycle facts,, Journal of Monetary Economics, 41 (1998), 475.  doi: 10.1016/S0304-3932(98)00006-3.  Google Scholar

[6]

F. E. Kydland and E. C. Prescott, Time to build and aggregate fluctuations,, Econometrica, 50 (1982), 1345.   Google Scholar

[7]

J.-O. Cho and T. F. Cooley, The business cycle with nominal contracts,, Economic Theory, 6 (1995), 13.  doi: 10.1007/BF01213939.  Google Scholar

[8]

J. B. Long, Jr. and C. I. Plosser, Real business cycles,, Journal of Political Economy, 91 (1983), 39.   Google Scholar

[9]

J. H. Stock and M. W. Watson, Does GNP have a unit root?,, Economics Letters, 22 (1986), 147.  doi: 10.1016/0165-1765(86)90222-3.  Google Scholar

[10]

J. Y. Campbell and N. G. Mankiw, Are output fluctuations transitory?,, The Quarterly Journal of Economics, 102 (1987), 857.  doi: 10.2307/1884285.  Google Scholar

[11]

L. J. Christiano and M. Eichenbaum, Current real-business cycle theories and aggregate labor-market fluctuations,, American Economic Review, 82 (1992), 430.   Google Scholar

[12]

L. J. Christiano and M. Eichenbaum, Unit roots in real GNP: Do we know and do we care?,, Carnegie-Rochester Conference Series on Public Policy, 32 (1990), 7.   Google Scholar

[13]

Lutz Arnold, "Business Cycle Theory,", Oxford University Press, (2002).  doi: 10.1093/acprof:oso/9780199256815.001.0001.  Google Scholar

[14]

M. Boldrin and M. Horvath, Labor contracts and business cycles,, Journal of Political Economy, 103 (1995), 972.  doi: 10.1086/262010.  Google Scholar

[15]

N. G. Mankiw and D. Romer, "New Keynesian Economics," Vols. 1 and 2,, Cambridge University Press, (1991).   Google Scholar

[16]

O. J. Blanchard and S. Fischer, "Lectures in Macroeconomics,", MIT Press, (1989).   Google Scholar

[17]

Philip R. Lane, The cyclical behaviour of fiscal policy: Evidence from the OECD,, Journal of Public Economics, 87 (2003), 2661.  doi: 10.1016/S0047-2727(02)00075-0.  Google Scholar

[18]

R. Cottle, J. Pang and R. Stone, "Linear Complimentarity Problem,", Classics in Applied Mathematics, (2009).   Google Scholar

[19]

R. E. Lucas, Jr., Econometric policy evaluation: A critique,, in, (1976), 19.  doi: 10.1016/S0167-2231(76)80003-6.  Google Scholar

[20]

R. E. A. Farmer and J.-T. Guo, Real business cycles and the animal spirits hypothesis,, Journal of Economic Theory, 63 (1994), 42.  doi: 10.1006/jeth.1994.1032.  Google Scholar

[21]

R. G. King and S. T. Rebelo, Resuscitating real business cycles,, in, (1999), 927.  doi: 10.1016/S1574-0048(99)10022-3.  Google Scholar

[22]

R. G. D. Allen, "Macroeconomic Theory: A Mathematical Treatment,", Macmillan, (1967).   Google Scholar

[23]

R. Neck, The Contribution of Control Theory to the Analysis of Economic Policy,, in, (2008), 6.   Google Scholar

[24]

V. R. Bencivenga, An econometric study of hours and output variation with preference shocks,, International Economic Review, 33 (1992), 449.  doi: 10.2307/2526904.  Google Scholar

[25]

S. Boyd and L. Vandenberghe, "Convex Optimization,", Cambridge University Press, (2004).   Google Scholar

[26]

T. Puu and I. Sushko, A business cycle model with cubic nonlinearity,, Chaos, 19 (2004), 597.  doi: 10.1016/S0960-0779(03)00132-2.  Google Scholar

[1]

Hong Niu, Zhijiang Feng, Qijin Xiao, Yajun Zhang. A PID control method based on optimal control strategy. Numerical Algebra, Control & Optimization, 2021, 11 (1) : 117-126. doi: 10.3934/naco.2020019

[2]

Jingrui Sun, Hanxiao Wang. Mean-field stochastic linear-quadratic optimal control problems: Weak closed-loop solvability. Mathematical Control & Related Fields, 2021, 11 (1) : 47-71. doi: 10.3934/mcrf.2020026

[3]

Pierluigi Colli, Gianni Gilardi, Jürgen Sprekels. Deep quench approximation and optimal control of general Cahn–Hilliard systems with fractional operators and double obstacle potentials. Discrete & Continuous Dynamical Systems - S, 2021, 14 (1) : 243-271. doi: 10.3934/dcdss.2020213

[4]

Lars Grüne, Matthias A. Müller, Christopher M. Kellett, Steven R. Weller. Strict dissipativity for discrete time discounted optimal control problems. Mathematical Control & Related Fields, 2020  doi: 10.3934/mcrf.2020046

[5]

Hai Huang, Xianlong Fu. Optimal control problems for a neutral integro-differential system with infinite delay. Evolution Equations & Control Theory, 2020  doi: 10.3934/eect.2020107

[6]

Yuan Tan, Qingyuan Cao, Lan Li, Tianshi Hu, Min Su. A chance-constrained stochastic model predictive control problem with disturbance feedback. Journal of Industrial & Management Optimization, 2021, 17 (1) : 67-79. doi: 10.3934/jimo.2019099

[7]

Vaibhav Mehandiratta, Mani Mehra, Günter Leugering. Fractional optimal control problems on a star graph: Optimality system and numerical solution. Mathematical Control & Related Fields, 2021, 11 (1) : 189-209. doi: 10.3934/mcrf.2020033

[8]

Christian Clason, Vu Huu Nhu, Arnd Rösch. Optimal control of a non-smooth quasilinear elliptic equation. Mathematical Control & Related Fields, 2020  doi: 10.3934/mcrf.2020052

[9]

Hongbo Guan, Yong Yang, Huiqing Zhu. A nonuniform anisotropic FEM for elliptic boundary layer optimal control problems. Discrete & Continuous Dynamical Systems - B, 2021, 26 (3) : 1711-1722. doi: 10.3934/dcdsb.2020179

[10]

Hui Lv, Xing'an Wang. Dissipative control for uncertain singular markovian jump systems via hybrid impulsive control. Numerical Algebra, Control & Optimization, 2021, 11 (1) : 127-142. doi: 10.3934/naco.2020020

[11]

Awais Younus, Zoubia Dastgeer, Nudrat Ishaq, Abdul Ghaffar, Kottakkaran Sooppy Nisar, Devendra Kumar. On the observability of conformable linear time-invariant control systems. Discrete & Continuous Dynamical Systems - S, 2020  doi: 10.3934/dcdss.2020444

[12]

Duy Phan, Lassi Paunonen. Finite-dimensional controllers for robust regulation of boundary control systems. Mathematical Control & Related Fields, 2021, 11 (1) : 95-117. doi: 10.3934/mcrf.2020029

[13]

Youming Guo, Tingting Li. Optimal control strategies for an online game addiction model with low and high risk exposure. Discrete & Continuous Dynamical Systems - B, 2020  doi: 10.3934/dcdsb.2020347

[14]

Stefan Doboszczak, Manil T. Mohan, Sivaguru S. Sritharan. Pontryagin maximum principle for the optimal control of linearized compressible navier-stokes equations with state constraints. Evolution Equations & Control Theory, 2020  doi: 10.3934/eect.2020110

[15]

Elimhan N. Mahmudov. Infimal convolution and duality in convex optimal control problems with second order evolution differential inclusions. Evolution Equations & Control Theory, 2021, 10 (1) : 37-59. doi: 10.3934/eect.2020051

[16]

Lars Grüne, Roberto Guglielmi. On the relation between turnpike properties and dissipativity for continuous time linear quadratic optimal control problems. Mathematical Control & Related Fields, 2021, 11 (1) : 169-188. doi: 10.3934/mcrf.2020032

[17]

Arthur Fleig, Lars Grüne. Strict dissipativity analysis for classes of optimal control problems involving probability density functions. Mathematical Control & Related Fields, 2020  doi: 10.3934/mcrf.2020053

[18]

Guangjun Shen, Xueying Wu, Xiuwei Yin. Stabilization of stochastic differential equations driven by G-Lévy process with discrete-time feedback control. Discrete & Continuous Dynamical Systems - B, 2021, 26 (2) : 755-774. doi: 10.3934/dcdsb.2020133

[19]

Xuefeng Zhang, Yingbo Zhang. Fault-tolerant control against actuator failures for uncertain singular fractional order systems. Numerical Algebra, Control & Optimization, 2021, 11 (1) : 1-12. doi: 10.3934/naco.2020011

[20]

Simone Fiori. Error-based control systems on Riemannian state manifolds: Properties of the principal pushforward map associated to parallel transport. Mathematical Control & Related Fields, 2021, 11 (1) : 143-167. doi: 10.3934/mcrf.2020031

 Impact Factor: 

Metrics

  • PDF downloads (68)
  • HTML views (0)
  • Cited by (2)

Other articles
by authors

[Back to Top]