This paper deals with a theoretical analysis about the problem confronting policy makers who are trying to minimize the time to combat a recession. The model contains political and economic lags and a transmission lag that imposes a constraint between the political lag and the economic lag. The task of the policy maker is to minimize the total time spent on the political and economic mediums given the constraint imposed by the transmission lag. The paper concludes that the optimal time spent on any medium will be higher in the more efficient relevant medium.
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References
1.
The Economist, “Bad Tidings,” (November 23, 1991). Newsweek, “Greenspan's Dilemma: How Low can You go?” (Oct. 7,1991).
2.
ScottRobert Hanes and NigroNic. Principles of Economics (New York: Macmillan Publishing Co., Inc., 1982).
