Study week on the econometric approach to development planning

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Monograph

Identifikator:: 1824422792

URN:: urn:nbn:de:zbw-retromon-217476

Document type:: Monograph

Title:: Study week on the econometric approach to development planning

Place of publication:: Amsterdam [u.a.]

Publisher:: North-Holland Publ. Co. [u.a.]

Year of publication:: 1965

Scope:: XLVII, 1259 S.; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Econometric analysis for assessing the efficacy of public investment / R. Dorman, Harvard University - Cambridge, Mass. - U.S.A.

Collection:: Economics Books

SEMAINE D'ÉTUDE SUR LE ROLE DE L ANALYSE ECONOMETRIOUE ETC. x | ticular operating policy. For example, if the structure is a school, the #’s would specify the average size of class, the number of sessions per day, and the like; if it is a dam, the u's would specify the release rules as a function of reservoir content, etc. The target values, T, need not denote deter- ministic results if the process is stochastic; they should denote parameters of the probability distribution of outputs. For a hydroelectric project, T, might be the expected level of power output in June and T, might be its variance. The problem is then to minimize c¢(x,, ..., x,) subject to Fi(x,, ..., x, up, ul) >T, 1=1, ..., k. This 1s a standard constrained minimization problem to be solved by any of the usual methods. In general it will be a very difficult problem to solve, but when projects are planned with costs expressed in eight or nine digits, the expense of solv- ing a minimization problem of any imaginable difficulty is as dust in the balance. Indeed, the expense of computation is likely to be insignificant in comparison with the cost of gather ing the data. You will note that though project selection and design are at issue, the determination of operating policy has intruded itself into the problem. This is inevitable, as has long been recognized. « Operations studies » are a standard component of project design work. Assume this minimization problem to be solved. A by-pro- duct of the solution is a set of shadow prices associated with the assigned targets. In the early stages of the work these by-products are the main product of the analysis. They inform us how much costs could be reduced by a one-unit relaxation in each of the targets. Ratios between them are the trade-off ratios between different objectives. If several projects are being considered simultaneously, discrepancies between their shadow prices for the same objective indicate misallocations and in- consistences in the overall investment plan Dorfman - pag. 11

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