nep-cmp New Economics Papers
on Computational Economics
Issue of 2008‒11‒25
sixteen papers chosen by
Stan Miles
Thompson Rivers University

  1. Meta Response Surface Design for General and Partial Equilibrium Models By Hess, Sebastian; von Cramon-Taubadel, Stephan
  4. The Euro-Med FTA and an Agro-Food Deal: Potential Impacts in Greece By Kitou, E.; Philippidis, G.
  5. Dairy reform scenarios with CAPSIM acknowledging quota rent uncertainty By Witzke, Heinz Peter; Tonini, Axel
  6. Agricultural Trade Liberalization and Poverty in Tunisia: Micro-simulation in a General Equilibrium Framework By Chemingui, Mohamed Abdelbasset; Thabet, Chokri
  8. Towards an understanding of tradeoffs between regional wealth, tightness of a common environmental constraint and the sharing rules By BOUCEKKINE, RAOUF; Krawczyk, Jacek B.; VALLÉE, Thomas
  10. The MODERE Model and The Economic Analysis of Farmers€٠Decisions By Gomez G., Carlos Mario; Gutierrez, Carlos
  12. The Regional Multi-Agent Simulator (RegMAS): assessing the impact of the "Health Check" in an Italian region By Lobianco, Antonello; Esposti, Roberto
  13. Tactical and Strategic Sales Management for Intelligent Agents Guided By Economic Regimes By Ketter, W.; Collins, J.; Gini, M.; Gupta, A.; Schrater, P.
  15. Efficient Supply of Cultural Landscape in a CGE Framework By Rodseth, K.L.
  16. MODELLING IMPACTS OF SOME EUROPEAN BIOFUEL MEASURES By von Ledebur, Oliver; Salamon, Petra; Zimmermann, Andrei; van Leeuwen, Myrna; Tabeau, Andrej; Chantreuil, Frederic

  1. By: Hess, Sebastian; von Cramon-Taubadel, Stephan
    Abstract: Due to the complexity of general and partial equilibrium models, conventional sensitivity analysis, qualitative reviews or literature-based meta-analyses do not allow for detailed assessments of the role of individual parameters and policy shocks across different models. Therefore, the partial equilibrium model €܇SIM€ݠand a single country CGE are employed to generate synthetic scenarios based on randomly specified combinations of base data, elasticities and tariff changes selected from previously specified, plausible ranges. The synthetic meta-data has the advantage that the values of explanatory variables are measured exactly. This makes it possible to explore complex issues of functional form and interaction between variables in the estimation of the response surface of each model as well as for a joint response surface of both models. The results indicate that firstand second-order polynomials provide sufficient approximations of the model responses, and especially for the CGE model, interaction terms of elasticities with policy variables play an important role. Furthermore, simultaneous estimation of a response surface of scenarios from both models proves to be feasible and enables quantitative comparisons of different model output, e.g. welfare measures.
    Keywords: General Equilibrium, Partial Equilibrium, Response Surface Design, Research Methods/ Statistical Methods,
    Date: 2008
  2. By: Gelan, Ayele; Schwarz, Gerald
    Abstract: Using a CGE model calibrated on Scottish data, this paper examines two important issues related to evaluating impacts of the Single Farm Payment. These are specification of product transformation functions and investigation into supply elasticity parameter. Simulation results from a standard CGE were compared with those from an alternative optimisation framework proposed in this study. The latter yielded a policy effect that is likely to represent behaviour of a profit maximising farmer. The parameter sensitivity analysis showed the important role differences in supply conditions can play; which implied a need for further econometric studies to estimate supply parameters.
    Keywords: Single farm payments, decoupling, multi-output farming, farm types, CET function, CGE modelling, Agricultural Finance, Demand and Price Analysis, Farm Management, Research Methods/ Statistical Methods,
    Date: 2008
  3. By: Toma, Luiza; Ashworth, Cheryl J.; Stott, Alistair
    Abstract: This research analyses the impacts of a scientific advance that improves animal welfare, upon the environment and trade in Scotland using partial equilibrium (PE) modelling. The science improves pig neonatal survival through improved (high fibre) sow diets used before mating. Our model simulates the effects of animal welfare changes on the pig production systems (pig meat) and further on trade flows (trade in pig meat) and environment (water and air pollution). We consider two animal welfare simulation scenarios, namely the status quo €Ӡno animal welfare change as regards pig neonatal mortality (baseline scenario) and the case of improving pig neonatal survival (alternative scenario) and compare the impacts on trade and environment between the two scenarios during the simulation horizon 2008-2015. The results show that the increase in animal welfare has a lower impact on the environment in the alternative scenario compared to the baseline scenario (by about 6% at the end of the simulation horizon) and a positive impact on net trade in the alternative scenario compared to the baseline scenario (by about 13% at the end of the simulation horizon).
    Keywords: Pig Welfare, Trade, Environment, Scotland, Partial Equilibrium Model., Agricultural and Food Policy, Environmental Economics and Policy, Research Methods/ Statistical Methods, Q18, Q50,
    Date: 2008–11–13
  4. By: Kitou, E.; Philippidis, G.
    Abstract: We employ a heavily modified €ءgricultural€٠variant of the GTAP model and a realistic baseline scenario to assess the impact on the Greek economy from a hypothetical €بub and spoke€٠and a €؆TA€٠EUMED agro-food and fisheries trade agreement. Long run estimates show that Greek agro-food and fisheries sectors are not seriously affected, where surprisingly, trade diversionary losses to Greece from the FTA scenario are minor given minimal south-south trade links between Mediterranean Partner Countries (MPC). Further research shows that under complete CAP decoupling, notable additional welfare gains for MPC are realised, whilst Greece stands to lose approximately ‚̳00 million.
    Keywords: Barcelona Declaration, Computable General Equilibrium (CGE), Global Trade Analysis Project (GTAP), International Relations/Trade,
    Date: 2008
  5. By: Witzke, Heinz Peter; Tonini, Axel
    Abstract: The study provides an agricultural multi commodity analysis able to focus and investigate the ongoing EU milk reform. The analysis is carried with the Common Agricultural Policy SIMulation (CAPSIM) model which is a comparative-static, partial equilibrium modelling tool covering the whole of agriculture of EU member states. The model provides a reference run which is a "baseline scenario" where the 2003 CAP Reform is projected into the future. This scenario is compared to a "quota expiry" scenario where milk quotas are abolished by 2015, a "soft landing" scenario where further quota expansions are envisaged and an "early quota expiry" by 2009. Sensitivity analysis is done for different set of quota rent assumptions and export refund abolition. Key results, under a "quota expiry scenario" are that milk production would increase by 2.8% in EU27 whereas milk prices would drop by 7.5%.
    Keywords: EU milk reform, CAPSIM, quota rent., Agricultural and Food Policy, Agricultural Finance,
    Date: 2008
  6. By: Chemingui, Mohamed Abdelbasset; Thabet, Chokri
    Abstract: The study tries to answer the following questions: Will exposure to world agricultural prices generate more poverty or less? To what extent will households be affected by changes in agricultural trade polices? Do multilateral agricultural liberalization matter more than bilateral changes? Results of simulations using a computable general equilibrium (CGE) model linked to household survey data suggest that trade liberalization has only modest effects on the level of GDP, but it has a substantial effect in reducing poverty. Moreover, the combined effects of global and domestic liberalization are more pro-poor than the effect of domestic liberalization alone. As a net importer of agricultural commodities, Tunisia may be expected to experience terms-oftrade losses from higher world agricultural prices. However, given Tunisia's significant agricultural import protection policies, it is expected that the agricultural sector will lose from trade liberalization that removes this protection.
    Keywords: Tunisia, agricultural trade liberalization, poverty, International Relations/Trade,
    Date: 2008
  7. By: WÄ…s, Adam; Malak-Rawlikowska, Agata
    Abstract: Likely policy changes leading towards further liberalisation of the Common Agricultural Policy would certainly influence farmers€٠income and revenue risks. Thus, a question arises both for farmers and for policy makers about possible effects and necessary adjustments that should be made to face such changes. The paper examines long-term impacts of changes of key policy factors on income risk in Polish dairy farms. Deterministic linear programming farm model was used to estimate farm incomes and likely changes in production pattern, while stochastic simulation farm model was applied for examining income risk. The main results of this model chain are optimal production structures for farm types modelled in a set of assumed policy conditions as well as farm income and its volatility. Comparison of model results across scenarios allows to state that increase of milk quota and reduction of direct payments significantly decrease farm incomes on dairy farms in Poland. Full liberalisation of the Common Agricultural Policy and withdrawal of direct payments results with even more radical negative income effects especially in the cluster of smaller milk producers. Simulation indicates significantly increased risk of achieving low farm incomes.
    Keywords: Milk quota, direct payment, income risk, farm model, policy changes, Agricultural and Food Policy, Consumer/Household Economics, Research Methods/ Statistical Methods, Q10, Q18,
    Date: 2008–11–13
  8. By: BOUCEKKINE, RAOUF (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); Krawczyk, Jacek B.; VALLÉE, Thomas
    Abstract: Consider a country with two regions that have developed differently so that their current levels of energy efficiency differ. Each region's production involves the emission of pollutants, on which a regulator might impose restrictions. The restrictions can be related to pollution standards that the regulator perceives as binding the whole country (e.g., enforced by international agreements like the Kyoto Protocol). We observe that the pollution standards define a common constraint upon the joint strategy space of the regions. We propose a game theoretic model with a coupled constraints equilibrium as a solution to the regulator's problem of avoiding excessive pollution. The regulator can direct the regions to implement the solution by using a political pressure, or compel them to employ it by using the coupled constraints' Lagrange multipliers as taxation coefficients. We specify a stylised model that possesses those characteristics, of the Belgian regions of Flanders and Wallonia. We analytically and numerically analyse the equilibrium regional production levels as a function of the pollution standards and of the sharing rules for the satisfaction of the constraint. For the computational results, we use NIRA, which is a piece of software designed to min-maximise the associated Nikaido-Isoda function.
    Keywords: coupled constraints, generalised Nash equilibrium, Nikaido-Isoda function, regional economics, environmental regulations.
    JEL: C6 C7 D7
    Date: 2008–10
  9. By: Karaca, Orhan; Philippidis, George
    Abstract: n October 2005, the European Council, having determined that Turkey fulfilled the Copenhagen political criteria, opened accession negotiations with Turkey. Following this decision, the arguments on Turkish membership has become a priority for Turkey since Turkey€ٳ accession to the EU would have considerable impacts on Turkey and the EU. Therefore, the aim of this study is to investigate the potential economic impacts of Turkish membership to the European Union. Since much of the support and tariff protection in EU markets is associated with agriculture and food production, the study focuses principally on these sectors. In this context, to derive estimates of Turkey€ٳ accession a multiregional computable general equilibrium (CGE) model framework is employed. Using the standard Global Trade Analysis Project (GTAP) model and version 6 database, the paper looks into the impacts of the accession, sectoral reallocations and the welfare effects.
    Keywords: Turkey, European Union, Economic Integration, Agriculture and Food, Computable General Equilibrium Models, GTAP, Agricultural and Food Policy, International Relations/Trade, Political Economy,
    Date: 2008
  10. By: Gomez G., Carlos Mario; Gutierrez, Carlos
    Abstract: The MODERE, the Ministry of the Environment Irrigation Decision Model, is a simulation tool which uses mathematical programming methods to reveal the implicit multiattribute objective function lying behind the observed cropping decision. The model takes different criteria such as profit maximization, risk aversion, avoidance of management complexities and so forth into account. In order to determine the feasible combination of attributes of this objective function the model considers the production possibility frontier explicitly as depending on market prices, policy incentives, availability of production factors, water irrigation facilities agronomic vocation and other constraints. Once calibrated the model becomes a powerful tool to assess the impact of different policy scenarios such as subsidies decoupling, water prices modifications, irrigation technique substitution and so on. The MODERE is a preference revelation model purposedly designed to be integrated in the Decision Support Platform which is used by the Spanish Ministry of the Environment to compare the policy scenarios which are relevant to assess the effectiveness and economic impact of the measures designed to reach the environmental objectives of the Water Framework Directive. The model is supported by a comprehensive data base built on purpose for its implementation covering almost all the Spanish Irrigation Districts with high spatial detail. This model is currently one of the important modules of the information and decision support systems developed by the Economic Analysis Unit of the Water Directorate at the Ministry of the Environment in Spain.
    Keywords: Agricultural Economics, Water Economics, Simulated Models, Land Economics/Use, Political Economy, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,
    Date: 2008
  11. By: Kerkela, Leena
    Abstract: In this paper, the welfare results in trade liberalisation scenarios in global CGE models (like GTAP) are analysed. The default modeling strategy in trade is the Armington assumption with bilateral trade flows in industries. The negative terms of trade effects that often dominate the negative welfare outcome in simulation experiments are decomposed to imports and exports price effects. The numerical examples show that even in unilateral liberalisation with decreasing import tariffs, the welfare effects are dominated by domestic price level changes that also drive the exports prices. The numerical examples are built around simple GTAP tariff cut experiments with 3x3 country and commodity aggregation. The inherent feature in this type of models is that they support arguments for unilateral market access, like preferences, at the expense of multilateral trade liberalisation.
    Keywords: CGE Modeling, trade liberalisation, terms of trade, International Relations/Trade, Research Methods/ Statistical Methods,
    Date: 2008
  12. By: Lobianco, Antonello; Esposti, Roberto
    Abstract: Agent-based models (AMB) allow to conceive social systems as the result of individually-acting agents. When they are applied to agriculture, they can simulate the fundamental behaviour at the micro-level of the individual farmers, without the need of aggregating them in €ܲepresentative€ݠagents. RegMAS (Regional Multi Agent Simulator) is an open-source spatially explicit multi-agent model framework specifically designed for long-term simulations of effects of policies on agricultural systems. Using iterated conventional optimisation problems as agents' behavioural rules, it allows for a bidirectional integration between geophysical and social models where spatially distributed characteristics are taken into account in the linear programming problem of the optimising agents as individual resources. The model is applied to asses the impact of the Health Check, the imminent further Common Agricultural Policy (CAP) reform, on farms structures, incomes and land use in a hilly area of a central Italian region (Marche). Our results suggest that the Health Check, while increasing the farmer profit net of CAP support, is substantially neutral on the overall farmer incomes, also through a reduction of the off-farm labour. Neverless, a limited negative effects may arise in the farms numerousness, with the consequence of a land abandonment that is noticeable only on mountain areas, where distances between farmers are greater.
    Keywords: Agent based model, health check, regional economics, Agricultural and Food Policy, Research Methods/ Statistical Methods,
    Date: 2008–11–14
  13. By: Ketter, W.; Collins, J.; Gini, M.; Gupta, A.; Schrater, P. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: We present a computational approach that autonomous software agents can adopt to make tactical decisions, such as product pricing, and strategic decisions, such as product mix and production planning, to maximize profit in markets with supply and demand uncertainties. Using a combination of machine learning and optimization techniques, the agent is able to characterize economic regimes, which are historical microeconomic conditions reflecting situations such as over-supply and scarcity. We assume an agent is capable of using real-time observable information to identify the current dominant market condition and we show how it can forecast regime changes over a planning horizon. We demonstrate how the agent can then use regime characterization to predict prices, price trends, and the probability of receiving a customer order in a dynamic supply chain environment. We validate our methods by presenting experimental results from a testbed derived from the Trading Agent Competition for Supply Chain Management (TAC SCM). The results show that our agent outperforms traditional short- and long-term predictive methodologies (such as exponential smoothing) significantly, resulting in accurate prediction of customer order probabilities, and competitive market prices. This, in turn, has the potential to produce higher profits. We also demonstrate the versatility of our computational approach by applying the methodology to prediction of stock price trends.
    Keywords: agent-mediated electronic commerce;dynamic pricing;machine learning;rational decision making;market forecasting
    Date: 2008–10–20
  14. By: Girardin, Jean
    Abstract: A simple but new theoretical approach is used to analyse ex-ante the impact of tariff reduction. This methodology is based on the assumption of a constant price relation between each direct substitutable product. No elasticities are needed, but accurate import and domestic prices of the most sensitive and representative product of each tariff line are required. The present contribution forms a partial sector static simulation model that minimises the reduction of domestic production prices for the agricultural sector consecutive of the WTO market access negotiations of the Doha round. Results are shown on two levels whereas one of them provides rapidly a preliminary hierarchy of the sensitive products tariff lines and their optimal number. The second level provides a post-WTO maximal domestic price for aggregated products for which demand and supply elasticities are known. These maximal prices can be used as exogenous variable in dynamic models.
    Keywords: Maximal domestic price, Sensitive products, Partial Sector Simulation, Market Access Simulation, World Trade Organization, Demand and Price Analysis, International Relations/Trade, Research Methods/ Statistical Methods,
    Date: 2008
  15. By: Rodseth, K.L.
    Abstract: It is often assumed that the agricultural sector produces public goods or positive externalities that benefit the domestic consumers, in addition to its production of private goods. Efficient agricultural support is consequently directed towards resolving market failures caused by the existence of these public goods or externalities. We illustrate how this can be achieved in a Computable General Equilibrium model for one multifunctional aspect of agricultural production, namely the production of cultural landscape. Using a public good modeling framework as point of departure, we develop supply- and willingness to pay functions for cultural landscape. Governmental agricultural support is adjusted to achieve efficient supply of the public good. As an illustration we apply our framework using a general equilibrium model for Norway. We show that efficient supply of cultural landscape can be achieved even with a tremendous reduction in initial overall support of agricultural production.
    Keywords: CGE modeling, Multifunctionality, Public Goods, Land Economics/Use,
    Date: 2008
  16. By: von Ledebur, Oliver; Salamon, Petra; Zimmermann, Andrei; van Leeuwen, Myrna; Tabeau, Andrej; Chantreuil, Frederic
    Abstract: Against the background of increasing concerns regarding the energy supply security as well as environmental concern the interest for renewable energy sources has increased in recent years. The biofuel sector, backed by public policies, experienced a strong increase in and outside Europe. A methodology that allows for the estimation of the impacts of the fulfilment of the proposed biofuel targets in the EU member states is proposed and implemented in the AGMEMOD model for France and Germany. The so called normative approach, based on the use of a logistic function as biofuel demand function allows to perform simulations to assess the impact of the biofuel demand expansion on agricultural markets. The implemented approach and the simulation results indicate that crops production would adjust to the modified demand situation and depending on the proposed scenario the domestic supply would not be enough for the achievement of the biofuel targets in France and Germany.
    Keywords: biofuel targets, biodiesel, ethanol, modelling, Crop Production/Industries, Public Economics, Resource /Energy Economics and Policy,
    Date: 2008

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