nep-cmp New Economics Papers
on Computational Economics
Issue of 2008‒08‒06
six papers chosen by
Stan Miles
Thompson Rivers University

  1. Water scarcity and the impact of improved irrigation management: A CGE analysis By Alvaro Calzadilla; Katrin Rehdanz; Richard S.J. Tol
  2. Trade and the External Wealth of Nations By André Lemelin
  3. The Computational Difficulty of Bribery in Qualitative Coalitional Games By Andrew Dowell; Michael Wooldridge; Peter McBurney
  4. Simulating the impact of inflation on the progressivity of personal income tax in Brazil By Horacio Levy; José Ricardo Nogueira; Rozane Bezerra de Siqueira; Herwig Immervoll; Cathal O’Donoghue
  5. The IDE geographical simulation model : predicting long-term effects of infrastructure development projects By Kumagai, Satoru; Gokan, Toshitaka; Isono, Ikumo; Souknilanh, Keola
  6. The Use of CCS in Global Carbon Management: Simulation with the DICE Model By Daiju Narita

  1. By: Alvaro Calzadilla; Katrin Rehdanz; Richard S.J. Tol
    Abstract: We use the new version of the GTAP-W model to analyze the economy-wide impacts of enhanced irrigation efficiency. The new production structure of the model, which introduces a differentiation between rainfed and irrigated crops, allows a better understanding of the use of water resources in agricultural sectors. The results indicate that a water policy directed to improvements in irrigation efficiency in water-stressed regions is not beneficial for all. For water-stressed regions the effects on welfare and demand for water are mostly positive. For non-water scarce regions the results are more mixed and mostly negative. Global water savings are achieved. Not only regions where irrigation efficiency changes are able to save water, but also other regions are pushed to conserve water
    Keywords: Computable General Equilibrium, Irrigation, Water Policy, Water Scarcity, Irrigation efficiency
    JEL: D58 Q17 Q25
    Date: 2008–07
  2. By: André Lemelin
    Abstract: Most CGE trade models fix current account balances exogenously, in accordance with the widely accepted view that trade policy may influence trade flows, but that current accounts are constrained by symmetric capital account balances, on which trade policy has little effect. The MIRAGE-D model was developed to make explicit the international capital flows which must take place to balance the current account implications of the simulated trade flows, and to compute the cumulative consequences of such capital flows on the international investment positions (IIP) of countries. In MIRAGE-D, current account balances and their capital account counterparts are endogenous, following a three-tier portfolio management model, adapted from Decaluwé and Souissi (1994; Souissi, 1994; Souissi and Decaluwé, 1997), which represents country-agent wealth allocation behavior. The allocation of capital among countries and industries is determined by an investment supply and demand equilibrating mechanism. Investment supply is the demand for new physical capital ownership titles resulting from the wealth allocation process, while investment demand is a constant elasticity function of Tobins's q in the Jung-Thorbecke (2001) style. An illustrative simulation scenario was run with both MIRAGE-D and the standard version of MIRAGE. Apart from the IIP of countries, which the standard version does not produce, other simulation results, although not identical, show moderate differences, which are fully explained by the financial aspects, and arise from the consistency required between such financial aspects and the rest of the model.
    Keywords: CGE models, International Investment Position (IIP), Financial assets, International trade
    JEL: C68 D58 F17 F37 G11 G15
    Date: 2008
  3. By: Andrew Dowell (University of Liverpool); Michael Wooldridge (University of Liverpool); Peter McBurney (University of Liverpool)
    Abstract: Qualitative coalitional games (QCG) are representations of coalitional games in which self interested agents, each with their own individual goals, group together in order to achieve a set of goals which satisfy all the agents within that group. In such a representation, it is the strategy of the agents to find the best coalition to join. Previous work into QCGs has investigated the computational complexity of determining which is the best coalition to join. We plan to expand on this work by investigating the computational complexity of computing agent power in QCGs as well as by showing that insincere strategies, particularly bribery, are possible when the envy-freeness assumption is removed but that it is computationally difficult to identify the best agents to bribe.
    Keywords: Bribery, Coalition Formation, Computational Complexity
    JEL: C63 C78
    Date: 2007–11
  4. By: Horacio Levy (ISER University of Essex, Colchester and ECV, Vienna); José Ricardo Nogueira (Universidade Federal de Pernambuco, Recife); Rozane Bezerra de Siqueira (Universidade Federal de Pernambuco, Recife); Herwig Immervoll (OECD, Paris, ECV, Vienna, ISER University of Essex, Colchester and IZA, Bonn); Cathal O’Donoghue (National University of Ireland, Galway and IZA, Bonn)
    Abstract: Income tax reform proposals in Brazil have focused almost exclusively on changes in rates, aiming at increasing its progressivity. One important aspect that has been overlooked is the fact that, in the absence of a mechanism that adjusts the tax rules to price movements, the effects of inflation on the level and distribution of the income tax burden can be substantial, even in periods of low inflation (“bracket creep”, fiscal drag). Moreover, how inflation affects the progressivity of the income tax depends on the specifics of the tax structure. Making use of a tax-benefit microsimulation model for Brazil (BRAHMS), we simulate different scenarios regarding the level of inflation and the adjustment of the income tax rules in order to assess the potential revenue and distributive effects of inflation on the income tax in Brazil. Our findings suggest that the Brazilian income tax is quite sensitive to fiscal drag. If the income tax is not adjusted for inflation, progressivity would decrease but redistribution would increase due to a larger tax burden. However, as income tax revenue and redistribution are quite low, even after relatively high levels of inflation, the tax burden and income inequality would not substantially change.
    Keywords: income tax, inflation, Brazil, fiscal drag
    Date: 2008–03
  5. By: Kumagai, Satoru; Gokan, Toshitaka; Isono, Ikumo; Souknilanh, Keola
    Abstract: It is important to be able to predict changes in the location of populations and industries in regions that are in the process of economic integration. The IDE Geographical Simulation Model (IDE-GSM) has been developed with two major objectives: (1) to determine the dynamics of locations of populations and industries in East Asia in the long-term, and (2) to analyze the impact of specific infrastructure projects on the regional economy at sub-national levels. The basic structure of the IDE-GSM is introduced in this article and accompanied with results of test analyses on the effects of the East West Economic Corridor on regions in Continental South East Asia. Results indicate that border costs appear to play a big role in the location choice of populations and industries, often a more important role than physical infrastructures themselves.
    Keywords: Southeast Asia, East Asia, Economic geography, International economic integration, Geographical Simulation Model, Spatial economics
    JEL: D59 F29 O53 R49
    Date: 2008–06
  6. By: Daiju Narita
    Abstract: This study attempts a numerical simulation of potential CCS (carbon dioxide capture and storage) use by using a modified version of the DICE (Dynamic Integrated model on Climate and Economy) model (Nordhaus, 1994; Nordhaus and Boyer, 2000). In DICE, CO2 emissions are controlled to the extent in which a hypothetical optimal carbon tax justifies CO2 reduction by firms: in our analysis, CCS is used when the optimal tax level is higher than the price of CCS. The analysis assesses the economic optimality of CCS use with a range of different assumptions. The simulation particularly focuses on the difference of results originating from two sets of general assumptions on climate change modeling, reflecting the current debate on the economics of climate change (see for example, Heal, 2008): (1) Parameterization of the standard DICE; (2) Alternative assumptions whose hints are drawn from Stern (2007). In the standard DICE cases, the model calculation shows that at the price level of $25/tCO2 ($92/tC), CCS is introduced around in the middle of the twenty-first century. With the alternative assumptions (e.g., near-zero discount rate), CCS begins to be utilized massively earlier in the century. The two sets of results lead to contrasting policy implications on the future CCS use; this is particularly problematic in the CCS context since its benefits are not always clear-cut (e.g., limitedness of secondary benefits besides CO2 reduction, uncertainties about the validity of technology itself). Settlement of the current intellectual debate on the economics of climate change would greatly benefit the debate on the role of CCS as well
    Keywords: Carbon capture and storage (CCS), climate change, energy, integrated assessment models, dynamic optimization
    JEL: Q32 Q43 Q54
    Date: 2008–08

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