Policy Evaluation in Uncertain Economic Environments

William Brock, Steven Durlauf and Kenneth West (kdwest@wisc.edu)

No 10025, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a decision-theoretic approach to policy analysis. We argue that policy evaluation should be conducted on the basis of two factors: the policymaker's preferences, and the conditional distribution of the outcomes of interest given a policy and available information. From this perspective, the common practice of conditioning on a particular model is often inappropriate, since model uncertainty is an important element of policy evaluation. We advocate the use of model averaging to account for model uncertainty and show how it may be applied to policy evaluation exercises. We illustrate our approach with applications to monetary policy and to growth policy.

JEL-codes: C10 C50 (search for similar items in EconPapers)
Date: 2003-10
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (179)

Published as Brock, William A., Steven N. Durlauf and Kenneth D. West. "Policy Evaluation In Uncertain Economic Environments," Brookings Papers on Economic Activity, 2003, v2003(1), 235-322.

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Related works:
Journal Article: Policy Evaluation in Uncertain Economic Environments (2003)
Working Paper: Policy evaluation in uncertain economic environments (2003)
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