Optimizing macroeconomic policy: A review of approaches and applications

In this paper the main approaches to optimizing macroeconomic policy problems are reviewed. These include the classical approaches of Tinbergen, Theil and Frisch as well as several mathematical programming methods, such as linear programming, goal programming, interactive multiple criteria optimization, and methods of optimal control. In addition, several applications are described. Finally, the usefullness and suitability of these approaches to solving macroeconomic policy problems in practice is discussed.