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Optimal Control Theory and Grants in Aid

Author

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  • D A Livesey

    (Management Studies Group, University Engineering Department, Mill Lane, Cambridge CB2 1 RX, England)

Abstract

The methodology of optimal control theory is used to highlight some of the current policy issues raised in the United Kingdom by the central government's allocation of grants to local authorities. It is shown that there is a link between the number of policy variables and targets and the freedom of action of individual local authorities. One consequence of current policy is shown to be that it makes optimal control theory an even more relevant tool for the analysis of the rate support grant system. Another is that the demise of local control appears to be the logical outcome in the long run.

Suggested Citation

  • D A Livesey, 1986. "Optimal Control Theory and Grants in Aid," Environment and Planning C, , vol. 4(2), pages 121-129, June.
    • Handle: RePEc:sae:envirc:v:4:y:1986:i:2:p:121-129
    DOI: 10.1068/c040121
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    References listed on IDEAS

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    1. Buiter, Willem H, 1980. "The Macroeconomics of Dr. Pangloss: A Critical Survey of the New Classical Macroeconomics," Economic Journal, Royal Economic Society, vol. 90(357), pages 34-50, March.
    2. Tan, K C, 1979. "Optimal Control of Linear Econometric Systems with Linear Equality Constraints on the Control Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(1), pages 253-258, February.
    3. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    4. R J Bennett & K C Tan, 1979. "Allocation of the UK Rate Support Grant by Use of the Methods of Optimal Control," Environment and Planning A, , vol. 11(9), pages 1011-1027, September.
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