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Using compromise programming for macroeconomic policy making in a general equilibrium framework: theory and application to the Spanish economy

Author

Listed:
  • F J André

    (Universidad Pablo de Olavide)

  • M A Cardenete

    (Universidad Pablo de Olavide)

  • C Romero

    (Universidad Politécnica de Madrid)

Abstract

This paper aims to show how Compromise Programming, linked with some results connecting this approach with classic utility optimization, can become a useful analytical tool for designing and assessing macroeconomic policies. The functioning of the method is illustrated through an application to the Spanish economy. In this way, starting from a Computable General Equilibrium Model, a frontier of growth–inflation combinations is determined. After that, several Pareto-efficient policies that represent compromises between economic growth and inflation rate are established and interpreted in economic terms.

Suggested Citation

  • F J André & M A Cardenete & C Romero, 2008. "Using compromise programming for macroeconomic policy making in a general equilibrium framework: theory and application to the Spanish economy," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(7), pages 875-883, July.
    • Handle: RePEc:pal:jorsoc:v:59:y:2008:i:7:d:10.1057_palgrave.jors.2602415
    DOI: 10.1057/palgrave.jors.2602415
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    References listed on IDEAS

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    1. Kehoe, Timothy J & Polo, Clemente & Sancho, Ferran, 1995. "An Evaluation of the Performance of an Applied General Equilibrium Model of the Spanish Economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 6(1), pages 115-141, June.
    2. Manuel Alejandro Cardenete & Ferran Sancho, 2006. "An Applied General Equilibrium Model to Assess the Impact of National Tax Changes on a Regional Economy," World Scientific Book Chapters, in: Masayuki Doi (ed.), Computable General Equilibrium Approaches In Urban And Regional Policy Studies, chapter 4, pages 41-55, World Scientific Publishing Co. Pte. Ltd..
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    6. Ballard, Charles L. & Fullerton, Don & Shoven, John B. & Whalley, John, 2009. "A General Equilibrium Model for Tax Policy Evaluation," National Bureau of Economic Research Books, University of Chicago Press, number 9780226036335, July.
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    8. Charles L. Ballard & Don Fullerton & John B. Shoven & John Whalley, 1985. "Introduction to "A General Equilibrium Model for Tax Policy Evaluation"," NBER Chapters, in: A General Equilibrium Model for Tax Policy Evaluation, pages 1-5, National Bureau of Economic Research, Inc.
    9. Francisco J. André & Manuel Alejandro Cardenete, 2005. "Multicriteria Policy Making. Defining Efficient Policies in a General Equilibrium Model," Economic Working Papers at Centro de Estudios Andaluces E2005/04, Centro de Estudios Andaluces.
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    Cited by:

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    2. Francisco Javier André García & M. Alejandro Cardenete Flores, 2008. "Políticas económicas y ambientales eficientes en un contexto de equilibrio general aplicado," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 67(01), pages 72-91.
    3. Sánchez, Marco V. & Cicowiez, Martín, 2023. "Optimal allocation of agriculture’s public budget can improve transformation and healthy diets access in Ethiopia," Journal of Policy Modeling, Elsevier, vol. 45(6), pages 1262-1280.
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    5. Rahimeh Neamatian Monemi & Shahin Gelareh & Anass Nagih & Dylan Jones, 2021. "Bi-objective load balancing multiple allocation hub location: a compromise programming approach," Annals of Operations Research, Springer, vol. 296(1), pages 363-406, January.
    6. Francisco Salas-Molina, 2021. "A formal specification of multicriteria economics," Operational Research, Springer, vol. 21(4), pages 2627-2650, December.
    7. Francisco Andre & M. Alejandro Cardenete, 2009. "Designing Efficient Subsidy Policies in a Regional Economy: A Multicriteria Decision-Making (MCDM)-Computable General Equilibrium (CGE) Approach," Regional Studies, Taylor & Francis Journals, vol. 43(8), pages 1035-1046.
    8. Francisco J. André & Carlos Romero, 2006. "On the equivalence between compromise programming and the use of composite compromise metrics," Working Papers 06.33, Universidad Pablo de Olavide, Department of Economics.
    9. Francisco J. André & M. Alejandro Cardenete Flores, 2006. "Designing Efficient Policies in a Regional Economy. A MCDM-CGE Approach," Economic Working Papers at Centro de Estudios Andaluces E2006/03, Centro de Estudios Andaluces.

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