nep-cmp New Economics Papers
on Computational Economics
Issue of 2008‒05‒31
five papers chosen by
Stan Miles
Thompson Rivers University

  1. Would a Legal Minimum Wage Reduce Poverty? A Microsimulation Study for Germany By Müller, Kai-Uwe; Steiner, Viktor
  2. A Capacitated facility location problem with constrained backlogging probabilities By Francisco Silva; Daniel Serra
  3. Spatial Aspects of Trade Liberalization in Colombia:A General Equilibrium Approach By Eduardo Haddad; Jaime Bonet Moron; Geoffrey Hewings; Fernando Perobelli
  4. The Impact of Distribution System Characteristics on Computational Tractability By Iqbal Agha; Debra O'Connor
  5. Documentation of the Tax-Benefit Microsimulation Model STSM : Version 2008 By Viktor Steiner; Katharina Wrohlich; Peter Haan; Johannes Geyer

  1. By: Müller, Kai-Uwe (DIW Berlin); Steiner, Viktor (DIW Berlin)
    Abstract: In view of rising wage inequality and increasing poverty, the introduction of a legal minimum wage has recently become an important policy issue in Germany. We analyze the distributional effects of the introduction of a nationwide legal minimum wage of € 7.5 per hour on the basis of a microsimulation model which accounts for the complex interactions between individual wages, the tax-benefit system and net household incomes. Simulation results show that the minimum wage would be rather ineffective in reducing poverty, even if it led to a substantial increase in hourly wages at the bottom of the wage distribution and had no negative employment effects. The ineffectiveness of a minimum wage in Germany is mainly due to the existing system of means-tested income support.
    Keywords: minimum wage, wage distribution, working poor, poverty reduction, micro-simulation
    JEL: I32 H31 J32
    Date: 2008–05
  2. By: Francisco Silva; Daniel Serra
    Abstract: One of the assumptions of the capacitated facility location problem (CFLP) is that demand is known and fixed. Most often, this is not the case when managers take some strategic decisions such as locating facilities and assigning demand points to those facilities. In this paper we consider demand as stochastic and we model each of the facilities as an independent queue. Stochastic models of manufacturing systems and deterministic location models are put together in order to obtain a formula for the backlogging probability at a potential facility location. Several solution techniques have been proposed to solve the CFLP. One of the most recently proposed heuristics, a reactive greedy adaptive search procedure, is implemented in order to solve the model formulated. We present some computational experiments in order to evaluate the heuristics’ performance and to illustrate the use of this new formulation for the CFLP. The paper finishes with a simple simulation exercise.
    Keywords: Location, queuing, greedy heuristics, simulation
    JEL: C61 L80
    Date: 2008–05
  3. By: Eduardo Haddad; Jaime Bonet Moron; Geoffrey Hewings; Fernando Perobelli
    Abstract: This paper offers some preliminary steps in the marriage of some of the theoretical foundations of the new economic geography with spatial computable general equilibrium models. Modeling the spatial economy of Colombia using the traditional assumptions of CGE models makes little sense when one territorial unit, Bogotá, accounts for over one fourth of GDP and where transportation costs are high and accessibility low, compared to European or North American standards. Hence, handling market imperfections becomes imperative as does the need to address internal spatial issues from the perspective of Colombia’s increasing involvement with external markets. The paper builds on the CEER Model, a spatial CGE model of the Colombian economy; non-constant returns and non-iceberg transportation costs are introduced and some simulation exercises are carried out. The results confirm the asymmetric impacts that trade liberalization has on a spatial economy in which one region, Bogotá, is able to more fully exploit scale economies vis-à-vis the rest of Colombia. The analysis also reveals the importance of different hypotheses on factor mobility and the role of price effects to better understand the consequences of trade opening in a developing economy.
    Date: 2008–05–21
  4. By: Iqbal Agha (Department of Finance & Operations Management, Isenberg School of Management, University of Massachusetts at Amherst); Debra O'Connor (Department of Economics, College of the Holy Cross)
    Abstract: Mathematical programming models that seek optimal design and operational plans for distribution systems can be computationally intractable. This paper exam-ines the extent to which distribution configuration and demand characteristics affect the ease of obtaining an optimal solution. Problem characteristics, which are reflected in a model by the parameter values, can render the model for one distribution scenario to be computationally intractable and that for another to yield an optimal solution eas-ily. We introduce echelon-flow-based valid inequalities and use them to explicate the extent to which problem characteristics impact computational tractability.
    Keywords: Distribution; Integer programming; Logistics
    Date: 2008–05
  5. By: Viktor Steiner; Katharina Wrohlich; Peter Haan; Johannes Geyer
    Date: 2008

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