Using data envelopment analysis to assess macroeconomic policy performance
It is common practice to summarize the macroeconomic performance of countries in terms of the four well-known dimensions captured by the magic diamond of the OECD. This study provides a comparison of several synthetic indicators that merge the four separate indicators into one single statistic. These indicators are inspired by Data Envelopment Analysis (DEA)-based models, which allow for unequal weighting of the different economic objectives. The calculated weights then act as proxies for the true policy priorities. Comparison of the models focuses on the underlying assumptions as well as on the empirical results they generate.