Abstract
Tinbergen's policy rule states that we must have at least as many policy instruments as the number of target variables if we wish to realize an arbitrarily fixed set of policy targets. We explore the structural characterization of the controllability of economic systems described by a set of static or dynamic equations. First, an economic system is represented as a directed graph, where the nodes stand for economic variables, while the arcs indicate the relations among these variables. Then, the main result is as follows: a static economic system is structurally controllable if and only if there exists a set of disjoint paths on the graph representation or the system which connect the set of instruments to each target. Similar graph-theoretic characterization of structural controllability is obtained for dynamic systems. Conditions for structural output controllability and structural perfect controllability are also discussed.
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