|
on Computational Economics |
|
Issue of 2005‒04‒03
eight papers chosen by |
| By: | Zon,Adriaan,van; Kronenberg,Tobias (MERIT) |
| Abstract: | We employ a general purpose technology model with endogenous stochastic growth to simulate the effects of different energy policy schemes. An R&D sector produces endogenous growth by developing radical and incremental technologies. These innovations result in blueprints for capital intermediates, which require raw capital and either carbon or non-carbon-based fuels. A carbon tax therefore affects not only the final production sector but also the R&D sector by making the development of non-carbon-based technologies more attractive. Due to path dependencies and possible lock-in situations, policy can have a significant long-term impact on the energy structure of the economy. Allowing for different elasticities of substitution between consumption and environmental quality, we examine the effects of different carbon policies on growth, environmental quality, and welfare. We find that an anti-carbon policy may reduce welfare initially, but in the long run there is a strong potential for a ‘double dividend’ due to faster growth and reduced pollution. |
| Keywords: | research and development ; |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamer:2005011&r=cmp |
| By: | Holmberg, Pär (Department of Economics) |
| Abstract: | Producers submit committed supply functions to a procurement auction, e.g. an electricity auction, before the uncertain demand has been realized. In the Supply Function Equilibrium(SFE), every firm chooses the bid maximizing his expected profit given the bids of the competitors. In case of asymmetric producers with general cost functions, previous work has shown that it is very difficult to find valid SFE. This paper presents a new numerical procedure that can solve the problem. It comprises numerical integration and an optimization algorithm that searches an end-condition. The procedure is illustrated by an example with three asymmetric firms. |
| Keywords: | Supply function equilibrium; uniform-price auction; numerical integration; oligopoly; asymmetry; capacity constraint; wholesale electricity market |
| JEL: | C61 D43 D44 L11 L13 L94 |
| Date: | 2005–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2005_012&r=cmp |
| By: | Daniela Mantovani (University of Cambridge and Prometeia); Fotis Papadopoulos (Athens University of Economics and Business); Holly Sutherland (ISER, University of Essex); Panos Tsakloglou (Athens University of Economics and Business and IZA Bonn) |
| Abstract: | This paper considers the effects on current pensioner incomes of reforms designed to improve the long-term sustainability of public pension systems in the European Union. We use EUROMOD to simulate a set of common illustrative reforms for four countries selected on the basis of their diverse pension systems and patterns of poverty among the elderly: Denmark, Germany, Italy and the UK. The variations in fiscal and distributive effects on the one hand suggest that different paths for reform are necessary in order to achieve common objectives across countries, and on the other provide indications of the appropriate directions for reform in each case. |
| Keywords: | pensions, European Union, microsimulation |
| JEL: | C81 I30 H55 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1537&r=cmp |
| By: | Duo Qin (Queen Mary, University of London); Marie Anne Cagas (Asian Development Bank); Geoffrey Ducanes (Asian Development Bank); Nedelyn Magtibay-Ramos (Asian Development Bank); Pilipinas F. Quising (Asian Development Bank) |
| Abstract: | This paper develops empirical methods of assessing the sustainability and feasibility of public debt using the No Ponzi Game criterion, using the Philippines as the testing case. Both historical data and forecasts generated by a quarterly macro-econometric model are used in the assessment. Stochastic simulations are carried out to mimic future uncertainty. The test results show that, up to the end of the present administration in 2010, the Philippine government debt is not sustainable but weakly feasible, that the feasibility is vulnerable to major adverse shocks, and that simple budgetary deficit control policy is inadequate for achieving debt sustainability or strengthening feasibility. |
| Keywords: | Government debt, Ponzi game, Rollover bond portfolio. |
| JEL: | H62 H63 E62 F34 C53 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp527&r=cmp |
| By: | R. Anton Braun (Faculty of Economics, University of Tokyo); Daisuke Ikeda (Bank of Japan); Douglas H. Joines (Marshall School of Business, University of Southern California) |
| Abstract: | This paper quantifies the role of alternative shocks in accounting for the recent declines in Japanese saving rates and interest rates and provides some projections about their future course. We consider four distinct sources of variation in saving rates and real interest rates: changes in fertility rates, changes in survival rates, changes in technology and changes in uninsurable labor income risk. The emprical relevance of these factors is explored using a computable dynamic OLG model. We find that the combined effects of demographics and slower total factor productivity growth successfully explain both the levels and the magnitudes of the declines in the saving rate and the after-tax real interest rate during the 1990s. Model simulations indicate that the Japanese savings puzzle is over. |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2005cf328&r=cmp |
| By: | Nicholas Apergis (University of Macedonia, Greece); Stephen M. Miller (University of Connecticut and University of Nevada, Las Vegas); Alexandros Panethimitakis (University of Athens); Athanassios Vamvakidis (International Monetary Fund) |
| Abstract: | This paper evaluates inflation targeting and assesses its merits by comparing alternative targets in a macroeconomic model. We use European aggregate data to evaluate the performance of alternative policy rules under alternative inflation targets in terms of output losses. We employ two major alternative policy rules, forward-looking and spontaneous adjustment, and three alternative inflation targets, zero percent, two percent, and four percent inflation rates. The simulation findings suggest that forward-looking rules contributed to macroeconomic stability and increase monetary policy credibility. The superiority of a positive inflation target, in terms of output losses, emerges for the aggregate data. The same methodology, when applied to individual countries, however, suggests that country-specific flexible inflation targeting can improve employment prospects in Europe. |
| JEL: | E31 E32 E37 E52 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2005-06&r=cmp |
| By: | Aleš Bulíř; Kateřina Šmídková |
| Abstract: | Estimation and simulation of sustainable real exchange rates in some of the new EU accession countries point to potential difficulties in sustaining the ERM2 regime if entered too soon and with weak policies. According to the estimates, the Czech, Hungarian, and Polish currencies were overvalued in 2003. Simulations, conditional on large-model macroeconomic projections, suggest that under current policies those currencies would be unlikely to stay within the ERM2 stability corridor during 2004-2010. In-sample simulations for Greece, Portugal, and Spain indicate both a much smaller misalignment of national currencies prior to ERM2, and a more stable path of real exchange rates over the medium term than can be expected for the new accession countries. |
| Keywords: | ERM2, Foreign direct investment, Sustainable real exchange rates. |
| JEL: | F31 F33 F36 F47 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:10/2004&r=cmp |
| By: | Hyeok Jeong; Robert M. Townsend |
| Abstract: | This paper evaluates two well-known models of growth with inequality that have explicit micro underpinnings related to household choice. With incomplete markets or transactions costs, wealth can constrain investment in business and the choice of occupation and also constrain the timing of entry into the formal financial sector. Using the Thai Socio-Economic Survey, we estimate the distribution of wealth and the key parameters that best fit cross-sectional data on household choices and wealth. We then simulate the model economies for two decades at the estimated initial wealth distribution and analyze whether the model economies at those micro-fit parameter estimates can explain the observed macro and sectoral aspects of income growth and inequality change. Both models capture important features of Thai reality. Anomalies and comparisons across the two distinct models yield specific suggestions for improved research on the micro foundations of growth and inequality. |
| Keywords: | Model Evaluation, Growth and Inequality, Wealth-Constrained Self-Selection |
| JEL: | C52 D31 O41 |
| Date: | 2003–09 |
| URL: | http://d.repec.org/n?u=RePEc:scp:wpaper:05-10&r=cmp |