New Economics Papers
on Computational Economics
Issue of 2006‒01‒01
six papers chosen by

  1. An experience with Mathematica in the field of economics of the environment: DIAM By Minh Ha-Duong; Pierre Matarasso
  2. Markov Perfect Industry Dynamics with Many Firms By Gabriel Weintraub; C. Lanier Benkard; Ben Van Roy
  3. Uruguay, Pensions and Fiscal Sustainability. By Alvaro Forteza
  4. Multi-Unit Auctions to Allocate Water Scarcity Simulating Bidding Behaviour with Agent Based Models By Atakelty Hailu; Sophie Thoyer
  5. The effects of increasing openness and integration to the MERCOSUR on the Uruguayan labour market. A CGE modeling analysis By Maria Inés Terra; Marisa Bucheli; Silvia Laens; Carmen Estrades
  6. Performance Guarantees of Local Search for Multiprocessor Scheduling By Schuurman,Petra; Vredeveld,Tjark

  1. By: Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - - CNRS : UMR8568 - Ecole des Hautes Etudes en Sciences Sociales;Ecole Nationale du Génie Rural des Eaux et des Forêts;Ecole Nationale des Ponts et Chaussées); Pierre Matarasso (CIRED - Centre International de Recherche sur l'Environnement et le Développement - - CNRS : UMR8568 - Ecole des Hautes Etudes en Sciences Sociales;Ecole Nationale du Génie Rural des Eaux et des Forêts;Ecole Nationale des Ponts et Chaussées)
    Abstract: Climate change is one of the biggest challenges facing humankind for the next century. We expose how we build a Model about the Dynamics of Inertia and Adaptability in energy systems (DIAM) to study the question \"Shall we wait another decade before taking costly measures to curb greenhouse gases emissions\". Using primarily Mathematica, we had to use also the GAMS language, not only to be understood by other researchers in our field, but also to gain access to a powerful non linear constrained optimisation solver. It seems urgent to bridge the gap between these kind of solvers and Mathematica because when one builds models of complex systems, intertemporal optimisation is often preferred to recursive simulation.
    Keywords: climate change; nonlinear optimisation; integrated assessment model
    Date: 2005–12–21
  2. By: Gabriel Weintraub; C. Lanier Benkard; Ben Van Roy
    Abstract: We propose an approximation method for analyzing Ericson and Pakes (1995)-style dynamic models of imperfect competition. We develop a simple algorithm for computing an ``oblivious equilibrium,'' in which each firm is assumed to make decisions based only on its own state and knowledge of the long run average industry state, but where firms ignore current information about competitors' states. We prove that, as the market becomes large, if the equilibrium distribution of firm states obeys a certain ``light-tail'' condition, then oblivious equilibria closely approximate Markov perfect equilibria. We develop bounds that can be computed to assess the accuracy of the approximation for any given applied problem. Through computational experiments, we find that the method often generates useful approximations for industries with hundreds of firms and in some cases even tens of firms.
    JEL: C63 C73 L11
    Date: 2005–12
  3. By: Alvaro Forteza (Departmento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: We simulate the budget of the main pension institution of the country, the Banco de Previsión Social (BPS), from 1995, the year the reform was passed, to 2050, when the new system should be mature. We perform several sensitivity analyses to evaluate which are the key exogenous variables and parameters determining the financial performance of the BPS in the medium to long run. According to our simulations, the budget of the BPS will be highly sensitive to the ages of retirement and to the ability and willingness of the institution to control the fulfilment of the required conditions to receive a contributory pension. The flexibility with which the BPS granted these benefits in the past had significant effects on its financial performance, according to these simulations. In recent years, the BPS has tightened the controls, with potentially significant effects on both the budget and the number of individuals excluded from the contributory programs. We study the contingent fiscal liabilities that are
    Date: 2004–05
  4. By: Atakelty Hailu (School of Agricultural & Resource Economics, Perth,); Sophie Thoyer (Agro.M ; UMR LAMETA ; Montpellier, France)
    Abstract: Multi-unit auctions are promising mechanisms for the reallocation of water. The main advantage of such auctions is to avoid the lumpy bid issue. However, there is great uncertainty about the best auction formats when multi-unit auctions are used. The theory can only supply the structural properties of equilibrium strategies and the multiplicity of equilibria makes comparisons across auction formats difficult. Empirical studies and experiments have improved our knowledge of multi- unit auctions but they remain scarce and most experiments are restricted to two bidders and two units. Moreover, they demonstrate that bidders have limited rationality and learn through experience. This paper constructs an agent-based model of bidders to compare the performance of alternative auction formats under circumstances where bidders submit continuous bid supply functions and learn over time to adjust their bids to improve their net incomes. We demonstrate that under the generalized Vickrey, simulated bids converge towards truthful bids as predicted by the theory and that bid shading is the rule for the uniform and discriminatory auctions. Our study allows us to assess the potential gains from agent-based modelling approaches in the assessment of the dynamic performance of multi-unit procurement auctions. Some recommendations on the desirable format of water auctions are provided.
    Keywords: Multi-unit auctions, Learning, Multi-agent models, Water allocation
    JEL: P Q Z
    Date: 2005–12–20
  5. By: Maria Inés Terra (Departmento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Marisa Bucheli (Departmento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Silvia Laens (CINVE); Carmen Estrades (Departmento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: Uruguay is a small economy. Its integration to MERCOSUR has increased the exposure to regional macroeconomic inestability. The aim of this paper is to assess the impact of regional integration on labour market and poverty. We estimated wage differentials between labour categories, finding a 60% wage gap between formal and informal workers. A CGE model with an efficiency wage specification for unskilled labour was built. Results show that regional shocks deeply affect Uruguayan economy. The consideration of efficiency wage model is particularly important when shocks lead to a reallocation of resources towards sectors intensive in unskilled labour. A subsidy on formal, unskilled labour could contribute to decrease informality and therefore increase GDP, but this type of policy need to be carefully implemented, because it may have negative effects on investment. Finally, the effects on poverty and income distribution obtained through microsimulations are consistent with the results of the CGE experiments.
    Keywords: Uruguay, labour market, general equilibrium model, regional integration, efficiency wage, microsimulation, poverty
    JEL: D58 I32 F15 F16 J41
    Date: 2005–11
  6. By: Schuurman,Petra; Vredeveld,Tjark (METEOR)
    Abstract: Increasing interest has recently been shown in analyzing the worst-case behavior of local search algorithms. In particular, the quality of local optima and the time needed to find the local optima by the simplest form of local search has been studied. This paper deals with worst-case performance of local search algorithms for makespan minimization on parallel machines. We analyze the quality of the local optima obtained by iterative improvement over the jump, swap, multi-exchange, and the newly defined push neighborhoods. Finally, for the jump neighborhood we provide bounds on the number of local search steps required to find a local optimum.
    Keywords: operations research and management science;
    Date: 2005

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.