Adaptive Economic Governance Under Nonstationarity: A State-Contingent Alternative to Fixed Ideological Policy

Badreddine, Sadek (2026): Adaptive Economic Governance Under Nonstationarity: A State-Contingent Alternative to Fixed Ideological Policy.

Abstract

Economic government is often debated through persistent ideological labels even though the conditions that policy must address—demography, production, prices, migration, conflict, trade, housing, public finance, education, crime, and the distribution of income and wealth—change continually. This paper develops the Adaptive Economic Governance System (AEGS), a constitutional and computational proposal that separates stable rights from revisable objectives and state-contingent policy. Under AEGS, fundamental rights operate as hard constraints. Elected, field-qualified representatives establish transparent social objectives. Auditable statistical models retrieve historical analogues, estimate policy outcomes and uncertainty, and generate recommendations. A language model may synthesize verified evidence and construct candidate explanations but cannot act as an outcome oracle. An elected expert congress approves, rejects, or remands recommendations, while the system abstains when present conditions fall outside the support of its evidence. A synthetic proof of concept compares an adaptive historical-analogue rule with four fixed policy bundles over 400 paired, 180-period simulations. The adaptive rule reduces cumulative modeled social loss by 6.9 percent relative to the strongest fixed baseline. It nevertheless performs worse than that baseline in several familiar regimes; its aggregate advantage is concentrated in a compound shock excluded from training, where loss is 18.5 percent lower. Review delays and removal of the abstention safeguard reduce the advantage. These results demonstrate a mechanism under stated assumptions, not real-world causal effectiveness. The paper concludes that adaptive economic governance is a testable institutional research program, but one that must address democratic legitimacy, credentialism, model error, privacy, institutional capture, and constitutional feasibility before deployment.

• Item Type: MPRA Paper
• Language: English
• Keywords: adaptive governance; nonstationarity; economic policy; policy learning; artificial intelligence; technocracy; democratic accountability; robust decision-making
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C53 - Forecasting and Prediction Methods ; Simulation Methods; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C54 - Quantitative Policy Modeling; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy Formulation and Implementation; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; P - Economic Systems > P1 - Capitalist Systems > P16 - Political Economy; P - Economic Systems > P5 - Comparative Economic Systems > P51 - Comparative Analysis of Economic Systems

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