THE INTERFACES BETWEEN POLICY-MAKERS, MARKETS AND MODELERS IN THE DESIGN OF ECONOMIC-POLICY - AN INTERMODEL COMPARISON

As models have become more sophisticated they have come to embody views of the world which differ from each other in important ways. Different models can lead to very different policy prescriptions due to legitimate areas of disagreement between modellers. The policy problem has become more complex. We must now seek to find a way of formulating policy which takes account of this profound uncertainty. This search for "robust' policy has led in a number of directions. This paper illustrate the search for robustness by comparing a set of optimal policies in the current situation derived on a range of models. Section II discusses the key features of the models and the assumed government objectives. Section III demonstrates that reasonably good outcomes can be found for all the models but through rather different policies. It then argues that these policies are robust within the context of each model. Section IV then makes the case for relatively simple policy rules and illustrates how these can stabilise a model effectively. Section V draws some general conclusions. -from Authors