nep-cmp New Economics Papers
on Computational Economics
Issue of 2006‒07‒02
two papers chosen by
Stan Miles
York University

  1. Upper Bounds on Numerical Approximation Errors By Raahauge, Peter
  2. CAPITAL ACCOUNT LIBERALIZATION AND EXCHANGE RATE REGIME CHOICE, WHAT SCOPE FOR FLEXIBILITY IN TUNISIA? By BEN ALI Mohamed Sami; ;

  1. By: Raahauge, Peter (Department of Finance, Copenhagen Business School)
    Abstract: This paper suggests a method for determining rigorous upper bounds on approximation errors of numerical solutions to infinite horizon dynamic programming models. Bounds are provided for approximations of the value function and the policy function as well as the derivatives of the value function. The bounds apply to more general problems than existing bounding methods do. For instance, since strict concavity is not required, linear models and piecewise linear approximations can be dealt with. Despite the generality, the bounds perform well in comparison with existing methods even when applied to approximations of a standard(strictly concave)growth model.
    Keywords: Numerical approximation errors; Bellman contractions; Error bounds
    JEL: G00
    Date: 2006–06–21
    URL: http://d.repec.org/n?u=RePEc:hhs:cbsfin:2004_004&r=cmp
  2. By: BEN ALI Mohamed Sami; ;
    Abstract: Capital account liberalization and exchange rate regime choice, what scope for flexibility in Tunisia? This study evaluates within a game-theoretic framework the exchange rate regime from a welfare perspective. In a tradable-nontradable goods model framework, Tunisia’s exchange rate regime choice is cast in terms of strategic interactions between the monetary authority and domestic enterprises. The monetary authority is assumed to choose an optimal exchange rate regime according to a welfare-related criterion by minimising a loss function defined in terms of external competitiveness and domestic inflation. Simulations outcomes reveal that capital account liberalization in the Tunisian economic context is compatible with a flexible exchange rate regime.
    Keywords: Exchange rate regime, Liberalization, Convertibility, Capital Account, Welfare, Tunisia.
    JEL: F31 F32 F37 F47
    Date: 2006–03–01
    URL: http://d.repec.org/n?u=RePEc:wdi:papers:2006-815&r=cmp

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