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on Computational Economics |
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Issue of 2007‒08‒27
four papers chosen by |
| By: | IVALDI, Marc; VIBES, Catherine |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:7201&r=cmp |
| By: | Yuwen Dai |
| Abstract: | In this paper, we investigate the relationship between Chinese macroeconomic policy and economic growth, and examine how the choice of macroeconomic regime affects economic performance in China. An open-economy model is developed for this purpose. It is a three-sector “almost small" open-economy macroeconomic model, with asset markets and forward-looking agents. This open-economy model is then adopted to analyse the implications of both domestic and external growth shocks to the Chinese economy under two alternative macroeconomic policy regimes. These policy regimes have two extreme assumptions on the exchange rate, with differing degrees of financial capital mobility. The simulation results show that greater flexibility in the exchange rate regime allows the central bank to conduct independent monetary policy in the Chinese economy, the benefit from which increases as financial capital becomes more internationally mobile. Most growth shocks cause an expansion in the real GDP level, and there is a deflation in the price level and depreciation in the real exchange rate when the economy operates a floating exchange rate regime with high financial capital mobility. Overall, the expansionary effects in this macroeconomic environment will be beneficial to the Chinese economy. |
| Keywords: | Macroeconomics, Economic Growth, Monetary Policy, Exchange Rate, Capital Mobility, Chinese Economy, Computable General Equilibrium (CGE) Modelling |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c012_015&r=cmp |
| By: | Steven Gjerstad; Jason M. Shachat |
| Abstract: | The demonstration by Smith [1962] that prices and allocations quickly converge to the competitive equilibrium in the continuous double auction (CDA) was one of the first – and remains one of the most important results in experimental economics. His initial experiment, subsequent market experiments, and models of price adjustment and exchange have added considerably to our knowledge of how markets reach equilibrium, and how they respond to disruptions. Perhaps the best known model of exchange in CDA market experiments is the random behavior in the “zero-intelligence” (ZI) model by Gode and Sunder [1993]. They conclude that even without trader rationality the CDA generates efficient allocations and “convergence of transaction prices to the proximity of the theoretical equilibrium price,” provided only that agents meet their budget constraints. We demonstrate that – by any reasonable measure – prices don’t converge in their simulations. Their budget constraint requires that a buyer’s currency never exceeds her value for the commodity, which is an unnatural restriction. Their conclusion that market efficiency results from the structure of the CDA independent of traders’ profit seeking behavior rests on their claim that the constraints that they impose are a part of the market institution, but this is not so. We show that they in effect impose individual rationality, which is an aspect of agents’ behavior. Researchers on learning in markets have been misled by their interpretation of the ZI simulations, with deleterious effects on the debate on market adjustment processes. |
| Keywords: | Bounded rationality; double auction; exchange economy; experimental economics; market experiment; “zero intelligence” model |
| JEL: | C70 C92 D44 D51 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1204&r=cmp |
| By: | Jesse Maddaloni; Andrew Rowe; G. Cornelis van Kooten |
| Abstract: | Planning electricity supply is important because power demand continues to increase while there is a concomitant desire to increase reliance on renewable sources. Extant research pays particular attention to highly variable, low-carbon energy sources such as wind and small-scale hydroelectric power. Models generally employ only a simple load levelling technique, ensuring that generation meets demand in every period. The current research considers the power transmission system as well as load levelling. A network model is developed to simulate the integration of highly variable non-dispatchable power into an electrical grid that relies on traditional generation sources, while remaining within the network’s operating constraints. The model minimizes a quadratic cost function over two periods of 336 hours, with periods representing low (summer) and high (winter) demand, subject to various linear constraints. The model is numerically solved using Matlab and GAMS software environments. Results indicate that, even for a grid heavily dependent on hydroelectricity, the addition of wind power can create difficulties, with system costs increasing with wind penetration, sometimes significantly. |
| Keywords: | Electric networks, optimal power flow, wind power, intermittent sources |
| JEL: | Q40 Q42 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:rep:wpaper:2006-05&r=cmp |