The use of macroeconomic models in economic policy making : The Norwegian experience
Abstract Planning in Norway has a long tradition. The use of models is an integral part of short- and medium-term economic policy administration. A large-scale input-output model, MODIS IV, is used as the short- and medium-term forecasting and planning model. The use of the model secures consistency when analysing the economy. The model is very open in the sense that important interrelations in the economy are left out. The model contains only ‘good’ relations in the Leif Johansen sense of the word. Smaller aggregate and more closed versions of the model are used for analysing policy alternatives. These models contain both ‘good’ and ‘bad’ relations. The use of macroeconomic models is an important aid for proposals regarding economic policy in the Ministry of Finance. Because the whole ministry (with expert help from other ministries) takes an active part in the model work, MODIS IV serves as the centralizing mechanism. It helps to make economists from many ministries go around the same centre, speak the same ‘language’ and organize all relevant information and judgements in a consistent way. Experience shows that ‘numbers discipline’ and force the different arguments on to a higher level of precision.
Econometric Models and Economic Planning and Policy: Some Trends and Problems
If we use the term econometric models in a somewhat broad sense, then I think we can say that such models now play some part in connection with economic planning and policy-making “almost everywhere”. The roles they play, however, are different in different countries. On the one hand we have countries where the use of the models is integrated in the decision-making process itself in the relevant ministries or divisions of government. Sometimes in the past I have got the feeling that Norway has, in this respect, been a singleton, but this is probably not true. France may also be a case in point, and other countries have been developing in the same direction. On the other hand we have countries where the models are used mainly by independent agencies, private or public, but outside the decision-making process concerning national planning and policy. The United States may belong to this class. In such cases the use of econometric models will mainly be in the direction of forecasting, simulations of the historical development in order to find out about the influences of various factors such as elements of economic policy, exogenous influences of various sorts etc., and calculations of alternative conditional forecasts in order to elucidate possibilities in economic policy.
Resource Allocation In R&D Departments
AbstractThis paper examines the problem of allocating funds within research and development organizations, where several departments and multiple research areas must be considered. Furthermore, impacts arising from budget shifts must be measured in terms of various factors or criteria that may be qualitative or quantitative. Using a particular research and development organization, Ontario Hydro, as a backdrop, we develop a framework for evaluating budget changes when (a) multiple criteria, (b) multiple opinions, and (c) qualitative factors are involved. A three stage procedure for budget allocation is proposed. In the first stage, management responses regarding the perceived impacts of budget changes are combined to arrive at a consensus. In stage two, the multiple criteria consensus values are used to derive an overall impact rating for each proposed budget shift pertaining to each of a set of research areas. Finally, in stage three an optimal subset of budget shifts is chosen from the set of all possib...