Econometric techniques and models are still being extensively used in the business of forecasting and policy advice. This book presents recent advances in the theory and applications of quantitative economic policy, with particular emphasis on fiscal and monetary policies in a European and global context. The volume honors Andrew Hughes Hallett, a pioneer and major scientist in quantitative economic policy analysis, whose contributors are among his friends and former students.

This book deals with the stabilisation and control of centralised policy-making and its economic implications.

This volume contains a refereed selection of revised papers which were originally presented at the Second International Conference on Econometric Decision Models, University of Hagen (FernUni versitat). The conference was held in Haus Nordhelle, a meeting place in the mountainous area " Sauerland" , some 50 kilometers south of Hagen, on August 29 - September 1, 1989. Some details about this conference are given in the first paper, they need not be repeated here. The 40 papers included in this volume are organized in 10 "parts", shown in the table of contents. Included are such "fashionable" topics like "optimal control", "cointegration" and "rational expec tations models". In each part, the papers have been arranged alphabetically by author, unless there were good reasons for a different arrangement. To facilitate the decision making of the readers, all papers (except a few short ones) contain an abstract, a list of keywords and a table of contents. At the end of the proceedings volume, there is a list of authors. More than ten years ago, I began to organize meetings of econometricians, mainly called "seminar" or " colloquium". One major purpose of these meetings has always been to improve international cooperation of econometric model builders (and model users) from "the East" and "the West". Unprecedented changes to the better have taken place recently ("perestroika"). For a large fraction of participants from the Soviet Union, the 1989 conference was the first conference in a Western country.

Recent developments in public economics have largely been in the direction of reaffirming the limits of the market and of establishing new ones. The possible existence of fundamental non-convexities, imperfect and asymmetric information, incentive compatibility, imperfect competition, strategic complementarity, and scale economies led to the conclusion that a large set of market failures exist; such situations also imply government failure. Acocella, considers this complicated picture and provides a discussion of the different approaches to establishing social 'rankings' of the possible situations and the underlying principles. The arguments for and against different institutions are then analysed at a micro and macroeconomic level. The market and the government are recognised as imperfect, and thus complementary, institutions. Specific policy targets and instruments are considered in the areas of micro and macro-economic policy. Special attention is devoted to questions of policy management in an open economy. Finally, problems of domestic and international policy co-ordination are considered.

A new unified theory of economic policy which responds to conflicts between strategic public and private policymakers.

An examination of how the rational expectations revolution and game theory have enhanced the understanding of how an economy functions.

A leading expert on economic policy makes the convincing case for the foundation, coordination and reach of government action through economic policy. Presenting justifications for government intervention in coping with market failures, Acocella applies the theory of economic policy to current global issues.

This volume contains 24 of the contributions made to the conference on "Economic Decision-making in a Changing World" held in 1988. Within the general framework of reference the editors focus on six major issues and feature articles on each as separate subject areas.

Understanding the structure of a large econometric model is rather like the art of winetasting or like the art of playing a musical instrument. The quality of a wine results from a complex combination of various elements such as its colour which should be clear and crystalline, its smell which can be decomposed into a general aroma and a variety of particular characteristics, more or less persistent depending on the type and the age of the wine, its taste, of course, which again is a complex system whose equilibrium and charm depend on the whole set of ingredients: alcohol, tannin, glycerine, sugar, acidity . . . Similarly, a clarinetist's musicianship depends on the quality of his instrument, on his embouchure, fingering, tonguing and articu lation techniques, on his sense for rhythm, phasing and tone colour. However, the enchantment produced by a Romanee-Conti or by a brilliant performance of Brahm's F minor sonata for clarinet and piano arises from a process which is at the same time time much simpler and much more complex than the straightforward juxtaposition of individual causal relations. In recent years econometricians and macro-economists have been challenged by the problem of keeping abreast with an ever increasing number of increasingly more complex large econometric models. The necessity of developing systematic analytical tools to study the often implicit and hidden structure of these models has become more evident.