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Optimal control indicators for the assessment of the influence of government policy to business cycle shocks

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  • We consider idealised dynamic models isolating the relationship between GDP and government expenditures. In this setting we assess the possibility of smoothing the effect of business cycle shocks via government expenditure alone and propose optimal control indicators measuring the control potential of this government action. This provides with new indicators and indices refining the dynamic relationship obtained by ARMA or similar type of macro - modeling.
    Mathematics Subject Classification: Primary: 93C05, 93E20; Secondary: 49J21.


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