The industrial implications of an optimal reflationary mix for the British economy

This paper derives an optimal reflationary mix for the next decade and comments on the industrial implications of this policy. The discussion is based on simulations of the multisectoral dynamic model of the UK economy developed by members of the Cambridge Growth Project. The results suggest that the concentration on macroeconomic policy alone may be misguided and that instruments which attack the roots of Britain's industrial problems should receive more attention. The paper also demonstrates that the optimal control procedure is a reliable tool for steering an economy towards a desired target trajectory and that this is feasible for very large econometric models.