SEMAINE D'ÉTUDE SUR LE ROLE DE L ANALYSE ECONOMETRIQUE ETC.
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cedure is not only that it is more systematic but also (and
particularly) that, in general, taking account of the possibility
that future information may be reacted to contributes to better
results from the standpoint of the goal pursued (}).
The primary objective of this paper is to illustrate the
method of linear decision rules in the context of development
programming. The paper has no pretensions with respect to
the development of model building in this field. Models describ-
ing the constraints under which the economy operates are
undoubtedly important and in fact indispensable for the deri-
vation of decision rules; but it is felt that the introduction of
innovations in that area would shift the attention away from the
primary objective and, therefore, a very simple capital-income
ratio model is introduced in Section 2. In Section 3 a quadratic
social preference function is formulated, after which the theory
of linear decision rules follows in Sections 4 and 5.
Section 6 deals with the second objective of this paper: the
use of simulation techniques in development programming.
Since many of the structural relations and also the long-term
development of many crucial outside forces are subject to a
considerable degree of uncertainty, particularly in the field
of growth and development, it seems plausible that simulation
techniques can be valuable to indicate the range of variability
of the outcomes which result from different policy procedures.
In order to concentrate on the main idea, the application is
confined to the same simple case as that of the earlier sections.
2. THE MODEL
Let K, be the stock of capital goods at the end of year ¢
and Y, national income of that vear, both in real terms. One
(') An additional advantage is that the strategy approach enables the
decision maker to formulate predictions (no perfect predictions!) of his own
future actions and of their consequences. But this aspect will not be pursued
here
(7] Theil - pag.
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