Designing Public Policies (eBook)

Designing Public Policies 3
An Approach Based on Multi-Criteria Analysis and Computable General Equilibrium Modeling 3
Foreword 7
Preface 9
Acknowledgements 13
Contents 15
Chapter 1: General Framework: Policy Making as a Problem with Multiple Criteria 19
1.1 Introduction 19
1.2 Methodological Proposal 21
1.3 Elements of the Proposal and Structure of the Book 23
References 25
Chapter 2: Economic Policy Using Applied General Equilibrium Models: An Overview 27
2.1 Introduction 27
2.2 An Overview of General Equilibrium Modelling 28
2.3 From General Equilibrium Theory to Applied General Equilibrium 31
2.4 What Is an Applied General Equilibrium Model? 32
2.5 Main Elements of an Applied General Equilibrium Model 33
2.6 Parameter Specification 37
2.6.1 Calibration Processes or Numeric Instrumentation 37
2.6.2 Econometric Estimates 39
2.7 Benchmark Equilibrium 39
2.8 Main Applications of Applied General Equilibrium Models 41
2.9 Conclusions: Advantages and Disadvantages of Applied General Equilibrium Models 43
References 45
Chapter 3: Basic Aspects of the Multiple Criteria Decision Making Paradigm 50
3.1 Introduction 50
3.2 The Traditional Decision Paradigm and the MCDM Approach 51
3.3 Some Basic Concepts and Definitions 52
3.3.1 Attributes 53
3.3.2 Objectives 53
3.3.3 Aspiration Levels or Targets 53
3.3.4 Goals 53
3.3.5 Criterion 54
3.3.6 Pareto Optimality 54
3.3.7 Trade-Offs Among Criteria 55
3.3.8 Payoff Matrix 55
3.4 A General Distance Function Based Upon a Family of p-Metrics 55
3.5 Multiobjective Programming: The Generation of the Pareto Frontier 57
3.6 Compromise Programming: Approximation to an Ideal Solution 59
3.7 Satisficing Logic and Goal Programming 61
3.8 Is There a Best MCDM Method for Economic Policy Design? 65
3.9 A Historical Summary: The ``Pioneers of South Carolina´´ or the Influence of the ``Young Turks´´ 66
3.10 Some Final Remarks 68
References 69
Chapter 4: Multicriteria Economic Policies: General Ideas and Some Previous Experiences 71
4.1 Introduction 71
4.2 General Setting 72
4.3 Building Efficient Policies in Terms of Growth and Inflation 75
4.3.1 Preliminaries 75
4.3.2 Identifying the Set of Efficient Policies 76
4.3.3 Testing the Efficiency of Observed Policies 78
4.3.4 Policy Recommendations 78
4.4 Towards the Ideal Point: Building Compromise Policies 80
4.4.1 Preliminaries and Setting 80
4.4.2 Obtaining the Compromise Set 81
4.4.3 Reducing the Size of the Compromise Set 82
4.4.4 Evaluating the Observed Policy 83
4.5 Designing Efficient Subsidy Policies in a Regional Economy 84
4.5.1 Preliminaries 85
4.5.2 Stating the Policy Design Problem 86
4.5.3 A Bi-Criteria Problem: Output Variations Versus Agricultural Profit 87
4.5.4 A Problem with more than Two Criteria 89
4.6 Concluding Remarks 93
References 94
Chapter 5: Building a CGE Model for Economic and Environmental Policies 95
5.1 Introduction 95
5.2 Technology and Producer Behaviour 96
5.3 Demand, Preferences and Consumer Behaviour 98
5.4 Modelling Pollution Emissions and Emissions Charges 99
5.5 The Public Sector: Taxes and Expenditures 100
5.6 Markets for Production Inputs 101
5.7 Foreign Sector and Closure Rule 102
5.8 Databases and Calibration 102
References 103
Chapter 6: Designing Efficient Policies in Terms of Economic and Environmental Objectives 104
6.1 Introduction 104
6.2 Setting the Policy Design Exercise 105
6.2.1 Policy Instruments 105
6.3 Efficient Policies Regarding Growth and Emissions 107
6.4 Efficient Policies with more than Two Criteria 109
6.5 Conclusions 113
References 114
Chapter 7: Compromise Policies: An Integration of Economic and Environmental Criteria 115
7.1 Introduction 115
7.2 Preliminaries 116
7.3 Obtaining the Compromise Set with Two Objectives 117
7.4 Interpreting the Compromise Set 118
7.5 Constructing the Compromise Set with more than Two Policy Objectives 120
7.6 Evaluating the Observed Policy 123
7.7 Concluding Remarks 124
References 124
Chapter 8: Joint Design of Economic and Environmental Policies: A Simonian Satisficing Approach 126
8.1 Introduction 126
8.2 Policy Setting: Objectives and Instruments. The Payoff Matrix 128
8.3 Searching for a Satisficing Joint Policy 129
8.4 Balanced Satisficing Policies 132
8.5 Establishing a Hierarchy for the Policy Goals 133
8.6 Concluding Remarks 135
References 135
Chapter 9: Proposal for an Alternative Multicriteria Policy Approach Based on Welfare Functions 137
9.1 Introduction 137
9.2 Basic Concepts and Notation 138
9.3 Two Classical Approaches for Social Policy Making 139
9.4 An Alternative Proposal Based on Compromise Programming 140
9.5 A Computable Version 142
9.6 Conclusions and Discussion 144
References 144
Chapter 10: Conclusions and Further Research 146
10.1 Conclusion 146
10.2 Discussion and Guidelines for Future Research 148
References 150
Index 152