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on Computational Economics |
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Issue of 2010‒09‒18
twelve papers chosen by |
| By: | Erwing L. Corong; Rachel C. Reyes; Angelo B. Taningco |
| Abstract: | The Philippines has been participating in preferential and multilateral trade liberalization since the 1990s. However, the poverty effects of these trading arrangements are not yet fully known. This paper, which uses a computable general equilibrium (CGE) model, finds that reducing both Most-Favored-Nation (MFN) tariff rate and ASEAN Free Trade Area’s Common Effective Preferential Tariff (CEPT) rate, combined with enhancing direct income taxes to offset the loss in tariff revenue, are instrumental in reducing poverty in the country. It also shows that the relatively poor and less-skilled household groups, like agricultural workers and industrial workers, as well as the poorest of the poor, gain from such trading arrangements because these substantially lower consumer prices. As such, this paper proposes that the Philippine government be more active and further promote preferential and multilateral trade liberalization in order to help eradicate poverty. |
| Keywords: | Computable general equilibrium, international trade, social accounting matrix, Philippines, poverty |
| JEL: | D33 D58 F13 F14 I32 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:mpiacr:2010-06&r=cmp |
| By: | Sudipto Mundle; N.R. Bhanumurthy; Surajit Das |
| Abstract: | In this paper a fiscal consolidation program for India has been presented based on a policy simulation model that enables us to examine the macroeconomic implications of alternative fiscal strategies, given certain assumptions about other macro policy choices and relevant exogenous factors. The model is then used to estimate the outcomes resulting from a possible strategy of fiscal consolidation in the base case. The exercise shows that it is possible to have fiscal consolidation while at the same time maintaining high GDP growth of around 8% or so. The strategy is to gradually bring down the revenue deficit to zero by 2014-15, while allowing a combined fiscal deficit for centre plus states of about 6% of GDP. This provides the space for substantial government capital expenditure, which translates to a significant public investment program. This in turn leads to high overall investment directly and indirectly, via the crowding in effect on private investment, which drives the high GDP growth. The exercise has also tested the robustness of this strategy under two alternative scenarios of higher and lower advanced country growth compared to the base case. [Working Paper No. 2010-73] |
| Keywords: | Macroeconomic Modelling, Policy Simulation, Fiscal Policy, India |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2825&r=cmp |
| By: | Pietro Dindo; Jan Tuinstra |
| Abstract: | We introduce a framework to analyze the interaction of boundedly rational heterogeneous agents repeatedly playing a participation game with negative feedback. We assume that agents use different behavioral rules prescribing how to play the game conditionally on the outcome of previous rounds. We update the fraction of the population using each rule by means of a general class of evolutionary dynamics based on imitation, which contains both replicator and logit dynamics. Our model is analyzed by a combination of formal analysis and numerical simulations and is able to replicate results from the experimental and computational literature on these types of games. In particular, irrespective of the specific evolutionary dynamics and of the exact behavioral rules used, the dynamics of the aggregate participation rate is consistent with the symmetric mixed strategy Nash equilibrium, whereas individual behavior clearly departs from it. Moreover, as the number of players or speed of adjustment increase the evolutionary dynamics typically becomes unstable and leads to endogenous fluctuations around the steady state. These fluctuations are robust with respect to behavioral rules that try to exploit them. |
| Keywords: | Participation games, Heterogeneous behavioral rules, Revision protocol, Replicator Dynamics Logit Dynamics, Nonlinear dynamics |
| JEL: | C72 C73 |
| Date: | 2010–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2010/14&r=cmp |
| By: | Anna Batyra; Henri R. Sneessens (CREA, University of Luxembourg) |
| Abstract: | We use a calibrated general equilibrium model with heterogeneous labor and search to evaluate the quantitative effects of various labor tax cut scenarios. The focus is on skill heterogeneity combined with downward wage rigidities at the low end of the skill ladder. Workers can take jobs for which they are overeducated. We compare targeted and nontargeted tax cuts, both with or without over-education effects. Introducing over-education changes substantially the employment, productivity and welfare effects of a tax cut, although tax cuts targeted on the least skilled workers always have larger effects. |
| Keywords: | Minimum Wage, Job Creation, Job Destruction, Job Competition, Search Unemployment, Taxation, Computable General Equilibrium Models |
| JEL: | C68 E24 J64 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:10-01&r=cmp |
| By: | Luca Marchiori (CREA, University of Luxembourg); Patrice Pieretti (CREA, University of Luxembourg); Benteng Zou (CREA, University of Luxembourg) |
| Abstract: | The focus of this article is on the impact of high-skilled emigration on fertility and human capital of a sending country within an overlapping generations model where parents choose to finance higher education to a certain number of their children. We assume that high- and low-skilled children emigrate with a certain probability when they reach adulthood and that they send remittances to their parents back home. The model shows that an increase in the intensity of the brain drain induces parents to provide more higher education to their children and to raise less low-skilled children. The impact on fertility and on human capital formation however remains unclear. This is why we run numerical simulations by calibrating our model to a developing country like the Philippines. The calibration results show in particular, that increased brain drain lowers fertility and boosts long-run human capital formation in the sending country. |
| Keywords: | Simulation method, migration, fertility |
| JEL: | C63 F22 J13 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:10-06&r=cmp |
| By: | Grimaldi, Raffaele; Laurino, Antonio; Beria, Paolo |
| Abstract: | In the last 20 years light rail and tramway schemes have been introduced in many European cities. The effects of these schemes over public transport patronage, and the benefits they have generated, seem to have sometimes been overestimated. The availability of some experiences helps in deriving some reflections about the circumstances in which light rail schemes can be truly convenient compared to bus systems. This paper tries to give a contribution by developing a simplified model to support the choice between keeping a bus corridor or upgrading towards a light rail system. The choice is analysed on the basis of a parametrical socio-economic cost-benefit analysis. All the parameters introduced and used for a numerical simulation are discussed and some typical values from the literature are given. On the basis of these values, some feasibility abaci are drawn. |
| Keywords: | cost-benefit analysis; bus; tram; light rail; transit; public transport |
| JEL: | H54 L92 R42 D61 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24872&r=cmp |
| By: | John Cockburn; Ismaël Fofana; Luca Tiberti |
| Abstract: | The current global financial and economic crisis, which exacerbates the impacts of the energy and food crises that immediately preceded it, has spread to the developing countries endangering recent gains in terms of economic growth and poverty reduction. The effects of the crisis are likely to vary substantially between countries and between individuals within the same country. Children are among the most vulnerable population, particularly in a period of crisis. Especially in least developed countries, where social safety nets programs are missing or poorly performing and public fiscal space is extremely limited, households with few economic opportunities are at a higher risk of falling into (monetary) poverty, suffering from hunger, removing children from school and into work, and losing access to health services. This study simulates the impacts of the global economic crisis and alternative policy responses on different dimensions of child welfare in Western and Central Africa (WCA) over the period 2009-2011. It is based on country studies for Burkina Faso, Cameroon, and Ghana, which broadly represent the diversity of economic conditions in WCA countries. In order to capture the complex macro-economic effects of the crisis and the various policy responses – on trade, investment, remittances, aid flows, goods and factor markets – and to then trace their consequences in terms of child welfare – monetary poverty, hunger (caloric poverty), school participation, child labour, and access to health services – a combination of macro- and micro-analysis was adopted. The simulations suggest that the strongest effects are registered in terms of monetary poverty and hunger, although large differences between countries emerge. More moderate impacts are predicted in terms of school participation, child labour, and access to health care, although these are still significant and require urgent policy responses. Specifically, Ghana is the country where children are predicted to suffer the most in terms of monetary poverty and hunger, while Burkina Faso is where the largest deteriorations in schooling, child labour and access to health services are simulated. Among the policy responses examined to counteract the negative effects of the crisis on child well-being, a targeted cash transfer to predicted poor children is by far the most effective program. A comparison between a universal and targeted approach is also presented. |
| Keywords: | Global economic crisis, child poverty, hunger, education, child labour, health, West and Central Africa, Burkina Faso, Cameroun, Ghana, social protection |
| JEL: | D58 H31 I18 I21 I32 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:mpiacr:2010-10&r=cmp |
| By: | Fioretti, Guido |
| Abstract: | This article presents an agent-based model of an Italian textile district where thousands of small firms specialize in particular phases of fabrics production. It is an empirical and methodological model that reconstructs the communications between firms when they arrange production chains. In their turn, production chains reflect into road traffic in the geographical areas where the district extends. The reconstructed traffic exhibits a pattern that has been observed, but not foreseen, by policy makers. |
| Keywords: | Time-Geography; Agent-Based Models; Prato |
| JEL: | C69 R39 D29 R41 |
| Date: | 2010–09–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24902&r=cmp |
| By: | Mullat, Joseph E. |
| Abstract: | The study addresses important question regarding the computational aspect of coalition formation. Almost as well known to find payoffs (imputations) belonging to a core, is prohibitively difficult, NP-hard task even for modern super-computers. In addition to the difficulty, the task becomes uncertain as it is unknown whether the core is non-empty. Following Shapley (1971), our Singles Party Game is convex, thus the presence of non-empty core is fully guaranteed. The article introduces a concept of coalitions, which are called nebulouses, adequate to critical coalitions, Mullat (1979). Nebulouses represent coalitions minimal by inclusion among all coalitions assembled into a semi-lattice of sets or kernels of "Monotone System," Mullat (1971,1976,1995), Kuznetsov et al. (1982). An equivalent property to convexity, i.e., the monotonicity of the singles game allowed creating an effective procedure for finding the core by polynomial algorithm, a version of P-NP problem. Results are illustrated by MS Excel spreadsheet. |
| Keywords: | stability conditions; game theory; coalition formation |
| JEL: | C71 C63 C62 |
| Date: | 2010–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24821&r=cmp |
| By: | Jose Luis Moraga-Gonzalez (University of Groningen and CESifo); Zsolt Sandor (Universidad Carlos III de Madrid); Matthijs R. Wildenbeest (Department of Business Economics and Public Policy, Indiana University Kelley School of Business) |
| Abstract: | We generalize the model of Burdett and Judd (1983) to the case where an arbitrary finite number of firms sells a homogeneous good to buyers who have heterogeneous search costs. We show that a price dispersed symmetric Nash equilibrium always exists. Numerical results show that the behavior of prices with respect to the number of firms hinges upon the shape of the search cost distribution: when search costs are relatively concentrated (dispersed), entry of firms leads to higher (lower) average prices. |
| Keywords: | nonsequential search, oligopoly, arbitrary search cost distributions |
| JEL: | D43 L13 C72 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:iuk:wpaper:2010-11&r=cmp |
| By: | Martina Nardon (Dept. of Applied Mathematics, University Ca'Foscari of Venice); Paolo Pianca (Dept. of Applied Mathematics, University Ca'Foscari of Venice) |
| Abstract: | This contribution deals with options on assets which pay discrete dividends. We analyze some methodologies to extract information on dividends from observable option prices. Implied dividends can be computed using a modified version of the well known put-call parity relationship. This technique is straightforward, nevertheless, its use is limited to European options and, when dealing with equities, most traded options are of American-type. As an alternative, numerical inversion of pricing methods can be used. We apply different procedures to obtain implied dividends of stocks of the Italian Derivatives Market. |
| Keywords: | Implied dividends; put-call parity; option pricing; binomial methods. |
| JEL: | C63 G13 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:vnm:wpaper:198&r=cmp |
| By: | Benchekroun, H.; Ray Chaudhuri, A. (Tilburg University, Center for Economic Research) |
| Abstract: | In the absence of a successful international cooperative agreement over the control of emissions there is a growing interest in the role that clean technologies may play to alleviate the climate change problem. Within a non-cooperative transboundary pollution game, we investigate, analytically and within a numerical example based on empirical evidence, the impact of the adoption of a cleaner technology (i.e., a decrease in the emission to output ratio). We show that countries may respond by increasing their emissions resulting in an increase in the stock of pollution that may be detrimental to welfare. This possibility is shown to arise for a signi…cant and empirically relevant range of parameters. It is when the damage and/or the initial stock of pollution are relatively large and when the natural rate of decay of pollution is relatively small that the perverse e¤ect of clean technologies is strongest. Cooperation over the control of emissions is necessary to ensure that the development of cleaner technologies does not exacerbate the free riding behavior that is at the origin of the climate change problem. |
| Keywords: | transboundary pollution;renewable resource;climate change;clean technolo- gies;differential games |
| JEL: | Q20 Q54 Q55 Q58 C73 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:201097&r=cmp |