SATISFICING AND SEQUENTIAL TARGETS IN ECONOMIC POLICY: A POLITICO-ECONOMIC APPROACH

The standard optimising framework has difficulties in explainingmacroeconomic policy phenomena in some countries, such as long-termspiralling public debts and sequential setting of policy targets.Moreover, it has not responded convincingly to some common criticisms,such as the question of symmetry, and the failure to accountfor the existence of policy-lobbying groups. This paper suggeststhat a satisficing approach to economic policy is a possibleway of accommodating all the above. This approach combined withpriority target setting has been used in other social sciences.It concentrates on the concepts of sequential attention to policyobjectives and ‘satisfactory’ macroeconomic targets.It also provides a choice theoretical framework as a foundationof the satisficing approach to economic policy. A simple exampleof a satisficing sequential target model is presented. Thereis also an attempt to link other alternative approaches, suchas politico-economic models, with this framework.