Decoupled control of a macroeconomic model using frequency-domain methods

Abstract

This paper shows how to use multivariable frequency-domain methods of control system design and analysis to investigate questions of macroeconomic policy. It contains (i) a linearization algorithm for proceeding from a large non-linear econometric simulation model, which one needs if one is to work in the frequency domain: (ii) an algorithm, which uses recently developed multivariable theory, for designing a feedback regulation policy in the frequency domain; (iii) a description of how with the aid of these algorithms we have investigated the problem of a demand management policy for overcoming stagflation.