Optimal control indicators for the assessment of the
influence of government policy to business cycle shocks
John Leventides - Department of Economics, Division of Mathematics-Informatics, National and Kapodistrian University of Athens, 8 Pesmazoglou Street, Athens, 105 59, Greece (email)
Abstract: 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.
Keywords: Control systems, stochastic optimal control, business cycles,
dynamic macro - modeling and indicators.
Received: July 2012; Revised: October 2012; Available Online: June 2013.