Designing Public Policies: An Approach Based on Multi-Criteria Analysis and Computable General Equilibrium Modeling (Lecture Notes in Economics and Mathematical Systems)

This monograph provides a novel approach to the evaluation of economic policy by combining two different analytical strategies. On the one hand, the computable general equilibrium (CGE) analysis, a standard tool mostly used to quantify the impact of economic measures or changes in the structural data of the economy. On the other hand, the multiple criteria decision-making (MCDM) approach, an op- misation technique that deals with problems with more than one objective. Ty- cally, CGE is well suited for the analysis of the interactions of multiple agents from the point of view of a planner single objective. Combining this technique with the MCDM approach allows developing models in which we ?nd many interacting agents and a decision maker with several objectives. The contribution of this work is partly methodological and partly applied. It provides a framework for the analysis of this type of problems, as well as a series of applications in which the strength of the approach is made clear. The consideration of environmental problems, as a speci?c ?eld in which this technique of analysis can be used, is particularly well chosen. The environmental concern keeps growing steadily and has already become an issue in most of the standard economic decisions. It is therefore extremely important to ?nd systematic ways to introduce such a concern in the models with which we evaluate the impact of policy measures.

This book presents a methodological approach for the joint design of economic and environmental policies. The starting point is the observation that, in practice, policy makers do not usually have a well-defined objective, but they are typically concerned about a number of economic and environmental indicators that conflict with each other. In view of this, policy making is addressed by combining two separate analytical approaches: multiple criteria decision making (MCDM) and computable general equilibrium (CGE) modeling. The aim is to come up with a methodological framework for policy design which is both operational and consistent with economic theory. In short, this book offers a unified view of this novel approach, paying special attention to the connections between economic and environmental objectives. The methodological foundations are presented as well as some real applications that illustrate the pragmatic value of the theoretical proposal.