## ABSTRACT

Mathematical programming has the unique advantage of being able to indicate the best possible path to reach a certain economic target if and when there are selective feasible paths and various limitations of a technical, institutional, or political nature. However, the usual parametric programming technique of seeking an optimal con figuration of parameters for maximizing (or minimizing) a linear objective function subject to linear constraints is unsatisfactory from the standpoint both of macrodynamic hypothesis-making and policy-making. The principal difficulty, quite apart from computa tional inconvenience, will be found to lie in the convention of assuming the relevant parameters to be known and given and then fitting such fixed values of the given parameters as to yield a deter minate solution.1 Our concern in this chapter2 is to suggest an alternative parametric

programming model for attaining a target rate of growth of real national income with full employment through an optimal com bination of manipulative parameters subject to such constraints as the policy-makers of an advanced mixed-open economy might

impose on the optimal solution. Specifically this chapter will discuss: (a) the basic model with ‘instrument variables’ based on dynamic assumptions, and (b) parametric dynamic programming proper including a numerical optimal solution.