This short text is the output of a desire to produce a helpful additional source for my students and from that, perhaps be of
use to other similar students and managers of this subject area. After several years of working with classes on Management
Decision Making, the need for a short and focused integrative text was clear to me. There are many excellent texts on both
the qualitative and quantitative aspects of decision making, but few which address both.
Technological innovations are key causal agents of surprise and disruption. These innovations, and the disruption
they produce, have the potential to affect people and societies and therefore government policy, especially
policy related to national security. Because the innovations can come from many sectors, they are difficult to
predict and prepare for. The purpose of predicting technology is to minimize or eliminate this surprise.
Relatedly, controlling for the forecast error of the change in fiscal policy does not, in our
application, provide a way of estimating the causal effect of fiscal policy on growth. Over the
two-year intervals that we consider, changes in fiscal policy are unlikely to be orthogonal to
economic developments. Thus, the forecast error of fiscal consolidation over our two-year
intervals cannot be interpreted as an identified fiscal shock and cannot yield estimates of
actual fiscal multipliers. A large literature seeks to identify such exogenous shifts in
government spending and revenues.