This book has as its basic objective a unified treatment of that area of economic theory now commonly known as, following the pioneering work of Tinbergen and Hansen in the 1950s, the theory of economic policy. It is a theoretical rather than an applied or econometric study. On the crucial assumptions of a certainly known and linear economic structure, the book focuses on the abstract theory of policy implied by a generic linear deterministic policy problem. This generic policy problem is defined as resulting from the interaction of a policy objective, representing some abstract policymaker's desires, with a policy model, representing the feasible outcomes of policy actions. By identifying a variety both of policy objectives and of policy models within the imposed limitations of certainty and linearity, it is possible to encompass and thus unify a variety of policy problems in a common perspective.

The procedure for attaining this perspective is to begin from the known territory of the static theory of policy. In the work of Tinbergen, Hansen and Theil, two broad policy objectives – the fixed objective and the flexible objective – are associated with a given linear static policy model. In some relevant region of the target space, the fixed objective specifies a particular configuration of targets as desired; whereas the flexible objective alternatively specifies a preference ordering over all target configurations in that region.