Loss function and economic policy

In the loss function version PolTajka the loss function comprises 
  • four target variables: real gross domestic product growth, GDP price changes, unemployment rate and balance of current account as a percentage of the GDP in current prices. 
  • Different policy constellations are contrived by changing the target values and weights applied as coefficients when adding up the squared deviations of the target variables from their target values. 
  • One of the target value constellations is the latest Ministry of Finance forecast. 
  • Different weights are used for exceeding and remaining short of the target values. 

The value of the loss function is the following sum of squares: 

X = instrument value supplied by the user 
X0 = initial value of the instrument 
Y = target value calculated by the model 
Y0 = target value of the target variable 
v = weight of instrument 
w = weight of the target variable 

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