New Economics Papers
on Computational Economics
Issue of 2007‒11‒03
five papers chosen by

  1. Computational Efficiency in Bayesian Model and Variable Selection By Eklund, Jana; Karlsson, Sune
  2. Teaching Aggregate Demand and Supply Models By Wells, Graeme
  3. Tax Reform, Income Distribution and Poverty in Brazil: an Applied General Equilibrium Analysis By Joaquim Bento de Souza Ferreira Filho; Carliton Vieira dos Santos; Sandra Maria do Prado Lima
  4. The Economic Impact of Medical Migration: a Receiving CountryÕs Perspective By Martine Rutten
  5. The Macroeconomics of Health Savings Accounts By Juergen Jung; Chung Tran

  1. By: Eklund, Jana (Department of Business, Economics, Statistics and Informatics); Karlsson, Sune (Department of Business, Economics, Statistics and Informatics)
    Abstract: Large scale Bayesian model averaging and variable selection exercises present, <p> despite the great increase in desktop computing power, considerable computational <p> challenges. Due to the large scale it is impossible to evaluate all possible models and <p> estimates of posterior probabilities are instead obtained from stochastic (MCMC) <p> schemes designed to converge on the posterior distribution over the model space. <p> While this frees us from the requirement of evaluating all possible models the computational <p> effort is still substantial and efficient implementation is vital. Efficient <p> implementation is concerned with two issues: the efficiency of the MCMC algorithm <p> itself and efficient computation of the quantities needed to obtain a draw from the <p> MCMC algorithm. We evaluate several different MCMC algorithms and find that <p> relatively simple algorithms with local moves perform competitively except possibly <p> when the data is highly collinear. For the second aspect, efficient computation <p> within the sampler, we focus on the important case of linear models where the computations <p> essentially reduce to least squares calculations. Least squares solvers that <p> update a previous model estimate are appealing when the MCMC algorithm makes <p> local moves and we find that the Cholesky update is both fast and accurate.
    Keywords: Bayesian Model Averaging; Sweep operator; Cholesky decomposition; QR decomposition; Swendsen-Wang algorithm
    JEL: C11 C15 C52 C63
    Date: 2007–09–10
  2. By: Wells, Graeme (School of Economics and Finance, University of Tasmania)
    Abstract: This note analyses the inflation-targeting model that underlies recent textbook expositions of the Aggregate Demand-Aggregate Supply approach used in introductory courses in macroeconomics. The paper shows how numerical simulations of a model with inflation inertia can be used as a tool to help students understand adjustments in response to demand and supply shocks of various kinds.
    Keywords: economic modeling, econometrics, teaching methods, instructional materials
    Date: 2007–09
  3. By: Joaquim Bento de Souza Ferreira Filho; Carliton Vieira dos Santos; Sandra Maria do Prado Lima
    Abstract: This paper analyses the impacts of three different indirect tax policies on the Brazilian economy: reduction of indirect taxes over the main household consumption products: reduction of indirect taxes over the main inputs used in agriculture; and the reduction of indirect taxes over all products in a specific region (Sao Paulo State) in Brazil. The analysis was carried out with the aid of an inter-regional static general equilibrium model of the country that was linked to a micro-simulation model used for poverty and income distribution analysis. The first two simulations showed that the policies have potential to improve income distribution, mainly benefiting the lower income families in the poorest regions. The reduction of indirect taxes over goods and services in Sao Paulo state shows that this state would benefit more compared to the other states, an example of the so called "fiscal war". This policy also points to some regressive effects of the tax policies on income distribution, since it disproportionately benefits the higher income groups located in the Sao Paulo state. The strong fall significant drop in tax collection should be taken as a sign for restraining policy implementation.
    Keywords: Poverty, Income Distribution, General Equilibrium Models, Micro-simulation, Indirect Tax, Fiscal Policy, Brazil
    JEL: C68 H23 I32
    Date: 2007
  4. By: Martine Rutten (Netherlands Ministry of Finance and Erasmus University)
    Abstract: This paper seeks to determine the macro-economic impacts of migration of skilled medical personnel from a receiving countryÕs perspective, taking the UK as an archetype OECD economy that imports medical services. The resource allocation issues have been explored in theory, by further developing the Rybczynski theorem and empirically, using a Computable General Equilibrium (CGE) model with an extended health component. The main finding is that importing foreign doctors and nurses into the UK yields higher overall welfare gains compared to a generic increase in the NHS budget. Welfare gains rise in the case of wage protection.
    Keywords: medical migration, immigrant health care workers, migrant nurses, migrant doctors
    JEL: F22 I1
    Date: 2007–08
  5. By: Juergen Jung (Indiana University Bloomington); Chung Tran (Indiana University Bloomington)
    Abstract: We analyze whether a consumer driven health care plan like the newly established Health Savings Accounts (HSAs) can reduce health care expenditures in the United States and increase the fraction of the population with health insurance. We use an overlapping generations model with health uncertainty and endogenous health care spending. Agents can choose between a low deductible- and a high deductible health insurance. If agents choose to purchase the high deductible health insurance, they are allowed to contribute tax free to an HSA. We examine the steady state effects of introducing HSAs into a system with private health insurance for young agents and Medicare for old agents. Since the model is a general equilibrium model, we fully account for feedback effects from both, factor markets and insurance markets. Our results from numerical simulations indicate that HSAs can decrease total health expenditures by up to 3% of GDP but increase the number of uninsured individuals by almost 5%. Furthermore, HSAs decrease the aggregate level of health capital and therefore decrease output. We also address possible extensions of the HSA reform that include the eligibility to pay health insurance premiums with HSA funds, the full privatization of Medicaid via HSAs, and Medicare for workers.
    Keywords: Health Savings Accounts
    JEL: H51 I18 I38
    Date: 2007–10

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