New Economics Papers
on Computational Economics
Issue of 2008‒02‒23
six papers chosen by

  1. The General Equilibrium Effects of a Productivity Increase on the Economy and Gender in South Africa By Godbertha Kinyondo; Margaret Mabugu
  2. Using linear programming to analyze and optimize stochastic flow lines By Helber, Stefan; Schimmelpfeng, Katja; Stolletz, Raik; Lagershausen, Svenja
  3. Dynamic Adjustments to Terms of Trade Shocks: The USA Productivity Boom and Australia By Richard G. Harris; Peter E. Robertson
  4. On the Scientific Status of Economic Policy: A Tale of Alternative Paradigms By Giorgio Fagiolo; Andrea Roventini
  5. Some Effects of Transaction Taxes Under Different Microstructures By Paolo Pelizzari; Frank Westerhoff
  6. Labor Migration: Macroeconomic and Demographic Outlook for Europe and Neighborhood Regions By Vladimir Borgy; Xavier Chojnicki

  1. By: Godbertha Kinyondo (Department of Economics, University of Pretoria); Margaret Mabugu (Department of Economics, University of Pretoria)
    Abstract: This study utilises a computable general equilibrium (CGE) model to examine the effects of economy-wide (SIM 1) and partial (SIM 2) productivity increases on the economy, gender employment, wages, income and welfare in South Africa. The model has 49 sectors, 14 household categories, and 2 primary inputs. SIM 1 results in ‘output’ led employment demand and increased earnings for all skill types of men and women. Skilled men benefits more than others in most sectors. Under SIM 2, productivity has negative employment impact of all skills mostly in labour-intensive sectors. Some displaced labour relocates to expanded export-orientation and service sectors resulting in increased economy-wide jobs and earnings. Unskilled women earnings, however, decline because they are concentrated in low-paying positions. In addition, productivity improves household’s welfare due to reduced commodity prices and improved earnings.
    Keywords: CGE, FDI, South Africa, Gender, Productivity
    JEL: D24 F11 F14 F21 J16
    Date: 2008–02
  2. By: Helber, Stefan; Schimmelpfeng, Katja; Stolletz, Raik; Lagershausen, Svenja
    Abstract: This paper presents a linear programming approach to analyze and optimize flow lines with limited buffer capacities and stochastic processing times. The basic idea is to solve a huge but simple linear program that models an entire simulation run of a multi-stage production process in discrete time, to determine a production rate estimate. As our methodology is purely numerical, it offers the full modeling flexibility of stochastic simulation with respect to the probability distribution of processing times. However, unlike discrete-event simulation models, it also offers the optimization power of linear programming and hence allows to solve buffer allocation problems. We show under which conditions our method works well by comparing its results to exact values for two-machine models and approximate simulation results for longer lines.
    Keywords: Flow lines, random processing times, performance evaluation, buffer allocation, linear programming, simulation.
    JEL: C61
    Date: 2008–02
  3. By: Richard G. Harris (Department of Economics, Simon Fraser University); Peter E. Robertson (School of Economics, The University of New South Wales)
    Abstract: How has the USA’s “new economy” productivity boom affected Australia? We consider this question using a dynamic multi-sector growth model of the Australian and USA economies. We find that productivity growth in the USA durables sector generates small but important gains to Australia. We find that the transmission of growth is generated through increased export demand for Agriculture. Consequently we find that the USA’s productivity growth tends to favour Australia’s traditional export sectors. Likewise it increases the relative demand for less skilled labour in Australia and reduces the demand for skilled labour and higher education.
    Keywords: Terms of Trade; Productivity; Economic Growth; Human Capital; Computable General Equilibrium Models
    Date: 2007–06
  4. By: Giorgio Fagiolo; Andrea Roventini
    Abstract: In the last years, a number of contributions has argued that monetary -- and, more generally, economic -- policy is finally becoming more of a science. According to these authors, policy rules implemented by central banks are nowadays well supported by a theoretical framework (the New Neoclassical Synthesis) upon which a general consensus has emerged in the economic profession. In other words, scientific discussion on economic policy seems to be ultimately confined to either fine-tuning this "consensus" model, or assessing the extent to which "elements of art" still exist in the conduct of monetary policy. In this paper, we present a substantially opposite view, rooted in a critical discussion of the theoretical, empirical and political-economy pitfalls of the neoclassical approach to policy analysis. Our discussion indicates that we are still far from building a science of economic policy. We suggest that a more fruitful research avenue to pursue is to explore alternative theoretical paradigms, which can escape the strong theoretical requirements of neoclassical models (e.g., equilibrium, rationality, etc.). We briefly introduce one of the most successful alternative research projects -- known in the literature as agent-based computational economics (ACE) -- and we present the way it has been applied to policy analysis issues. We conclude by discussing the methodological status of ACE, as well as the (many) problems it raises.
    Keywords: Economic Policy, Monetary Policy, New Neoclassical Synthesis, New Keynesian Models, DSGE Models, Agent-Based Computational Economics, Agent-Based Models, Post-Walrasian Macroeconomics, Evolutionary Economics.
    Date: 2008–02–14
  5. By: Paolo Pelizzari; Frank Westerhoff
    Abstract: We show that the effectiveness of transaction taxes depends on the market microstructure. Within our model, heterogeneous traders use a blend of technical and fundamental trading strategies to determine their orders. In addition, they may turn inactive if the profitability of trading decreases. We find that in a continuous double auction market the imposition of a transaction tax is not likely to stabilize financial markets since a reduction in market liquidity amplifies the average price impact of a given order. In a dealership market, however, abundant liquidity is provided by specialists and thus a transaction tax may reduce volatility by crowding out speculative orders.
    Keywords: transaction tax; Tobin tax; microstructures; agent-based models; liquidity
    Date: 2007–12–01
  6. By: Vladimir Borgy; Xavier Chojnicki
    Abstract: In this paper, we assess the demographic and economic consequences of migrations in Europe and neighborhood countries. In order to do so, we rely on a multi-region world overlapping generations model (INGENUE2). The rich modeling framework of this multi-regions model allows us to put into connection migration with the "triangular" relationship between population aging, pension reforms and international capital markets. With this model, we are also able to quantify the demographic and economic consequences of migration flows on both the regions receiving and losing migrants. Our analysis is based on a very detailed migration scenario between Western Europe and the Neighborhood regions constructed by taking into account both the current situation and some prospective empirical scenarios. Our quantitative results shed some light on the long term consequences of migration on regions that are not at the same stage in the ageing process. Concerning the regions receiving migrants, despite some improvement of their public pension system, it appears that a realistic migration scenario does not offset the effect of ageing in these regions, leaving room for pension reforms. Concerning the regions losing migrants, the adverse economic consequences of emigration appear to be all the more important than the region is advanced in the ageing process (and is already suffering from a declining population).
    Keywords: CGEM; migration; international capital flows; neighborhood policy; INGENUE; capital movements; demoeconomics; demography
    JEL: F21 C68 J61 H55 J11
    Date: 2007–12

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