Is There a Case for the MTFS?

Peter Westaway () and Simon Wren-Lewis

No 411, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper offers a critique of the UK government's Medium Term Financial Strategy from a policy optimization perspective. It argues that recent versions of the MTFS can be interpreted as representing the outcome of a policy optimization exercise, but that certain key aspects remain unclear. These include the role of output in the objective function, the interpretation of nominal GDP targets and the role of fiscal policy as an instrument. The importance of these issues is illustrated by carrying out various optimal control exercises on the National Institute's domestic econometric model.

Keywords: Fiscal Policy; Monetary Policy; Policy Optimization (search for similar items in EconPapers)
Date: 1990-04
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Journal Article: Is There a Case for the MTFS? (1993)
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