Do Chemical Reactors Hold the Solution for Global Economic Crises?

19 Pages Posted: 28 Mar 2012

See all articles by Yochanan Shachmurove

Yochanan Shachmurove

City University of New York, CUNY City College of New York - Department of Economics; The University of Pennsylvania - Department of Economics

Reuel Shinnar

affiliation not provided to SSRN (deceased)

Date Written: March 28, 2012

Abstract

What can economists learn from dynamic partial control of chemical reactors? Both chemical reactors and the economy involve many variables that are difficult to fully predict or control. Thus, this paper suggests the use of partial control, which involves indentifying only the key variables that monitor the system. This idea of observing relatively few variables and enabling policy makers to better control the economy is in line with the contributions of Sargent and Sims, who use a limited number of variables to study monetary and fiscal policies. This approach enables a better distinction between cause and effect in the macroeconomy.

Keywords: partial control; perturbation; steady state; monetary policy; economic growth; manufacturing; sufficiency, chemical reactors; delayed information model; Monte Carlo simulation; Kalman filter estimation

JEL Classification: P1, R1, E5, F4, L6, F1, R1

Suggested Citation

Shachmurove, Yochanan and Shinnar, Reuel, Do Chemical Reactors Hold the Solution for Global Economic Crises? (March 28, 2012). PIER Working Paper No. 12-010, Available at SSRN: https://ssrn.com/abstract=2030376 or http://dx.doi.org/10.2139/ssrn.2030376

Yochanan Shachmurove (Contact Author)

City University of New York, CUNY City College of New York - Department of Economics ( email )

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The University of Pennsylvania - Department of Economics ( email )

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Reuel Shinnar

affiliation not provided to SSRN (deceased)

City College of New York - Grove School of Enginee
N/A

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