Abstract
This paper outlines a control framework being developed for the TRYM model. The current procedure minimises a quadratic social loss function that targets non-steady state settings for unemployment and inflation. The iterative technique is described in detail and illustrated using the example of a temporary terms of trade shock. The effects of the shock on the model are compared for two seperate policy regimes, one using the default TRYM policy reactions and the other from the optimal control procedure. The limitations of using control techniques as an aid to the policy formation process and the benefits to be derived from implementing optimal control on a model like TRYM are breifly discussed.
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