nep-cmp New Economics Papers
on Computational Economics
Issue of 2007‒10‒13
five papers chosen by
Stan Miles
Thompson Rivers University

  1. A Computable Economist’s Perspective on Computational Complexity By K. Vela Velupillai
  2. Computing Stochastic Dynamic Economic Models with a Large Number of State Variables: A Description and Application of a Smolyak-Collocation Method By Benjamin Malin; Dirk Krueger; Felix Kubler
  3. Simulating voting rule reforms for the Italian parliament. An economic perspective By Ottone, Stefania; Ponzano, Ferruccio; Ricciuti, Roberto
  4. Public spending and poverty reduction in an oil-based economy: the case of Yemen By Chemingui, Mohamed Abdelbasset
  5. Numerical solution of linear models in economics: The SP-DG model revisited By T. Andrade, G. Faria, V. Leite, F. Verona, M. Viegas; O. Afonso; P.B. Vasconcelos

  1. By: K. Vela Velupillai
    Abstract: A computable economist.s view of the world of computational complexity theory is described. This means the model of computation underpinning theories of computational complexity plays a central role. The emergence of computational complexity theories from diverse traditions is emphasised. The unifications that emerged in the modern era was codified by means of the notions of efficiency of computations, non-deterministic computations, completeness, reducibility and verifiability - all three of the latter concepts had their origins on what may be called "Post's Program of Research for Higher Recursion Theory". Approximations, computations and constructions are also emphasised. The recent real model of computation as a basis for studying computational complexity in the domain of the reals is also presented and discussed, albeit critically. A brief sceptical section on algorithmic complexity theory is included in an appendix.
    Date: 2007
  2. By: Benjamin Malin; Dirk Krueger; Felix Kubler
    Abstract: We describe a sparse grid collocation algorithm to compute recursive solutions of dynamic economies with a sizable number of state variables. We show how powerful this method may be in applications by computing the nonlinear recursive solution of an international real business cycle model with a substantial number of countries, complete insurance markets and frictions that impede frictionless international capital flows. In this economy the aggregate state vector includes the distribution of world capital across different countries as well as the exogenous country-specific technology shocks. We use the algorithm to efficiently solve models with 2, 4, and 6 countries (i.e., up to 12 continuous state variables).
    JEL: C68 C88 F41
    Date: 2007–10
  3. By: Ottone, Stefania; Ponzano, Ferruccio; Ricciuti, Roberto
    Abstract: The aim of this paper is to contribute to the debate about the electoral rules in Italy. In particular, we simulate some voting rules to test what is the best electoral system on the basis of a utility function that takes into account two indices – representativeness and governability. As long as governability is important, a mixed member system (75% plurality, 25% proportional representation) outperforms the others. Our tool is the software ALEX4.1.
    Keywords: Italian Parliament, electoral system, simulations
    JEL: A12 C88 D72
    Date: 2007–10
  4. By: Chemingui, Mohamed Abdelbasset
    Abstract: "This study is part of a collaborative project between the International Food Policy Research Institute and the Arab Planning Institute in Kuwait on public policy and poverty reduction in the Arab region. The purpose of this paper is to assess the impact of an increase in public spending in priority areas on economic growth and poverty reduction in Yemen. To accomplish this objective, the study builds a dynamic Computable General Equilibrium model to provide a baseline scenario of changes in the economy and poverty levels in Yemen during the period 1998-2016. Alternative scenarios are then compared to isolate the specific impact of several policies on poverty. The scenarios assume an increase in public spending devoted to three priority areas (agriculture, education, and health), which affect the economy through an increase in sectoral or economy-wide technical factor productivity. Results of public spending experiments show that targeting increased amounts of public spending towards education and health services will generate more economic growth and poverty reduction than increasing public spending solely on the agricultural sector. However, when an oil sector is a prominent part of the economy, as in Yemen, additional public spending on health and education does not improve productivity in the oil sector. Therefore, spending on agriculture becomes the most important channel for poverty reduction and economic growth. While increasing public spending in priority areas appears to be the best solution available for the government to reduce poverty during the next decade, the road is still long for Yemen to be able to achieve its Millennium Development Goals for poverty reduction. Re-allocating public expenditures from defense to key sectors appears to be an additional option for reducing poverty, given the financial constraints facing Yemen. However, in the current context of terrorism concerns, it will be difficult to convince policy-makers to reduce spending on defense and security. Seeking additional resources from international donors seems to be the only option available to increase benefits from increased public spending in the priority areas identified and assessed in this study." from Authors' Abstract
    Keywords: Public investments, Poverty, economic growth,
    Date: 2007
  5. By: T. Andrade, G. Faria, V. Leite, F. Verona, M. Viegas (PhD students at Universidade do Porto, Portugal); O. Afonso (CEMPRE and Faculdade de Economia da Universidade do Porto, Portugal); P.B. Vasconcelos (CMUP and Faculdade de Economia da Universidade do Porto, Portugal)
    Abstract: In general, complex and large dimensional models are needed to solve real economic problems. Due to these characteristics, there is either no analytical solution for them or they are not attainable. As a result, solutions can be only obtained through numerical methods. Thus, the growing importance of computers in Economics is not surprising. This paper focuses on an implementation of the SP-DG model, using Matlab,developed by the students as part of the Computational Economics course. We also discuss some of our teaching/learning experience within the course, given for the first time in the FEP Doctoral Programme in Economics.
    Keywords: SP-DG Model, Output, Inflation, Numerical Simulation, Teaching of Economics
    JEL: A12 A23 C61 C63 E24 E31 E32
    Date: 2007–10

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