Tinbergen model

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Tinbergen model

The Tinbergen model is a theoretical economic model named after the Nobel laureate in economics, Jan Tinbergen . Its basic message is that every economic policy goal requires at least one linearly independent instrument. The model is based on the analysis of objectives and instruments of economic policy on macro-econometric models.

Particular attention is paid to those exogenous variables that can be controlled by the state ("policy variables"), as well as those output variables that represent the goals of economic policy ("target variables").

The model clearly assigns economic policy goals to the corresponding means and thus to the economic policy agencies (e.g. the central bank is solely responsible for the goal of price level stability ). Because of the linear independence, coordination of economic policy decision makers is no longer absolutely necessary.

However, experience shows that linearly independent instruments do not exist in reality. Almost all economic policy instruments are related to one another, be it through identity , complementarity or antinomy (horizontal relationship). Often an instrument also has intrinsic value and is at the same time the target of another instrument (vertical relationship). This often results in a teleological fallacy, better known as an instrumental fallacy .

In practice, linear independence is usually not sufficient to achieve the goals set by politics. The instruments used must be independent, feasible and efficient enough that changing their variables can achieve the desired results.