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tions of the model. For example, having fixed the terminal
conditions at the end of the transitional period, we may agree
to choose a path through that period by maximising consumption
subject to the terminal conditions and, of course, to the
operating conditions of the period itself. For any given set
of conditions we can use the model to work out a path. If the
path is unacceptable we must reconsider the conditions that determined
it.
Or again, the model-builder may require some numerical
data from the policy maker. For example, he will need to
know how much is to be spent on public health, education,
roads and other items of government consumption or investment
in social capital. He will also need to know the input
structure of these expenditures. Since all demands on resources
-ompete with each other, it will be possible to settle priorities,
including the level of total private consumption, only when
he implications of these proposed demands have been work->d
out.
ft will be noticed at this point that there is a need for a
aumber of government sub-models just like the industry submodels
advocated earlier. The operation of a health service
or a defence system is a complicated matter which cannot be
built into a general model. What is required is a separate
sub-model for each of these activities. Given an amount of
money to spend and a set of prices, each sub-model would be
used to decide how this money should be spent. From this a
cost structure would emerge for use in the general model. The
general model might show that some revision in the sums to
be spent would be necessary. As in the case of industry, there
would have to be iteration between the model and the submodels.
Social cost-benefit analysis should prove of great value
in this field of research [14] [15].
To sum up, the main features of policy-making for a system
are, in my opinion, as follows. First, the different objectives
of policy should, as far as possible, be considered together.
r_ =
Stone - pag. 27
