For a simple example, consider the question of how much Fort Knox should spend on protection.  Fort Knox has never been robbed. Statistical analysis using high-level, aggregated data would therefore indicate that the probability of a robbery is independent of the resources spent on guards. The policy implication from such analysis would be to eliminate the guards and save those resources. This analysis would, however, be subject to the Lucas Critique, and the conclusion would be misleading. In order to properly analyze the trade-off between the probability of a robbery and resources spent on guards, the "deep parameters" (preferences, technology and resource constraints) that govern individual behaviour must be taken explicitly into account. In particular, criminals' incentives to attempt to rob Fort Knox depends on the presence of the guards. In other words, with the heavy security that exists at the fort today, criminals are unlikely to attempt a robbery because they know they are unlikely to succeed. However, a change in security policy, such as eliminating the guards, would lead criminals to reappraise the costs and benefits of robbing the fort. So just because there are no robberies under the current policy does not mean this should be expected to continue under all possible policies. In order to answer the question of how much resources Fort Knox should spend on protection, the analyst must model the "deep parameters" and strive to predict what individuals will do conditional on the change in policy.
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Open Track 2004-2007, Doctoral Program, Graduate School of International Cooperation Studies, Kobe University Section Head of Tax Audit Technique, Directorate of Tax Audit and Collection, Head Office of Directorate General of Taxes, Ministry of Finance
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In a June 2011 interview on Bloomberg Television , Taylor stressed the importance of long term fiscal reform that sets the . federal budget on a path towards being balanced. He cautioned that the Fed should move away from quantitative easing measures and keep to a more static, stable monetary policy. He also criticized fellow economist Paul Krugman 's advocacy of additional stimulus programs from Congress, which Taylor said will not help in the long run.  In his 2012 book First Principles: Five Keys to Restoring America’s Prosperity , he endeavors to explain why these reforms are part of a broader set of principles of economic freedom.