nep-cmp New Economics Papers
on Computational Economics
Issue of 2008‒12‒01
eight papers chosen by
Stan Miles
Thompson Rivers University

  1. EURACE: A Massively Parallel Agent-Based Model of the European Economy By Christophe Deissenberg; Sander Van Der Hoog; Herbert Dawid
  2. Production and Finance in EURACE By Sander Van Der Hoog; Christophe Deissenberg; Herbert Dawid
  3. A Modified Galam's Model By Andrea Ellero; Giovanni Fasano; Annamaria Sorato
  4. Pseudo-NK: an Enhanced Model of Complexity By Marco Valente
  5. Trade Policy and Poverty in Benin: a General Equilibrium Analysis By Bernard Decaluwé; Epiphane Adjovi; Véronique Robichaud
  6. Econometric estimation of Armington import elasticities for regional CGE models of the Chicago and Illinois economies By Soo Jung Ha, Hewings, Geoffrey, and Turner, Karen; Geoffrey Hewings; Karen Turner
  7. The Food Crisis and its Impacts on Poverty in Senegal and Mali: Crossed Destinies By Dorothée Boccanfuso; Luc Savard
  8. Trade Liberalization and Poverty in Nepal: an Applied General Equilibrium Analysis By Prakash Raj Sapkota; John Cockburn

  1. By: Christophe Deissenberg (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Sander Van Der Hoog (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Herbert Dawid (Dept. of Business Administration - Bielefeld University)
    Abstract: EURACE is a major European attempt to construct an agent-based model of the European economy with a very large population of autonomous, purposive agents interacting in a complicated economic environment. To create it, major advances are needed, in particular in terms of economic modeling and software engineering.In this paper, we describe the general structure of the economic model developed for EURACE and present the Flexible Large-scale Agent Modeling Environment (FLAME) that will be used to describe the agents and run the model on massively parallel supercomputers. Illustrative simulations with a simplifiedmodel based on EURACE's labour market module are presented.
    Keywords: Agent-based Computational Economics; X-Machines; Parallelcomputation.
    Date: 2008–11–18
  2. By: Sander Van Der Hoog (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Christophe Deissenberg (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Herbert Dawid (Dept. of Business Administration - Bielefeld University)
    Abstract: EURACE is a major FP6 STREP project aiming at constructing anexhaustive agent-based model of the European economy, populated by avery large number of sophisticated, autonomous agents. The EURACEmodel, which has an explicit spatial structure, includes all the majormarkets considered in quantitative macroeconomic modelling (consumergoods, investment goods, labour, credit and finance). It offers aunique opportunity for studying, from a new perspective, theempirically observed but theoretically poorly understood link betweenthe real and the financial sphere of a modern economy. After summarilypresenting the main features of EURACE, this paper describes in moredetail the newly developed financial management module thatintermediates between the real and the financial spheres in EURACE. Ina nutshell, this module defines the link between the hiring andinvestment behavior of the firms as a function of the revenues theyobtain by selling their products, of the money they can raise on thecredit and financial markets, of their dividend policy, and othermajor aspects of financial decision-making.
    Keywords: Agent-based macroeconomics; Financial policy; Parallel computing
    Date: 2008–11–18
  3. By: Andrea Ellero (Department of Applied Mathematics, University of Venice); Giovanni Fasano (Department of Applied Mathematics, University of Venice); Annamaria Sorato (Department of Applied Mathematics, University of Venice)
    Abstract: In this paper we analyze the stochastic model proposed by Galam in [2], for information spreading in a `word-of-mouth' process among agents, based on a majority rule. Using the communications rules among agents defined in [2], we first perform simulations of the `word-of-mouth' process and compare the results with the theoretical values predicted by Galam's model. Since some dissimilarities arise in particular when a small number of agents is considered, we suggest some enhancements by introducing a new parameter dependent model. We propose a modified Galam's scheme which is asymptotically coincident with the original model in [2]. Furthermore, for relatively small values of the parameter, we provide a numerical experience proving that the modified model often outperforms the original one, in terms of efficiency.
    Keywords: Word-of-mouth process, information spreading, agent based simulation
    JEL: C02 C40
    Date: 2008–11
  4. By: Marco Valente
    Abstract: This paper is based on the acknowledgment that NK models are an extremely useful tool in order to represent and study the complexity stemming from interactions among components of a system. For this reason NK models have been applied in many domains, such as Organizational Sciences and Economics, as a simple and powerful tool for the representation of complexity. However, the paper suggests that NK suffers from un-necessary limitations and difficulties due to its peculiar implementation, originally devised for biological phenomena. We suggest that it is possible to devise alternative implementations of NK that, though maintaining the core aspects of the NK model, remove its major limitations to applications in new domains. The paper proposes one such a model, called pseudo-NK (pNK) model, which we describe and test. The proposed model appears to be able to replicate most, if not all, the properties of standard NK models, but also to offer wider possibilities. Namely, pNK uses real-valued (instead of binary) dimensions forming the landscape and allows for gradual levels of interaction among components (instead of presence-absence). These extensions provide the possibility to maintain the approach at the original of NK (and therefore, the compatibility with former results) and extend the application to further domains, where the limitations posed by NK are more striking.
    Keywords: NK model, Simulation models, Complexity, Interactions
    JEL: C15 D20 D83 L23 O31 O32
    Date: 2008–11–20
  5. By: Bernard Decaluwé; Epiphane Adjovi; Véronique Robichaud
    Abstract: Economic and financial crisis in Benin since 1980s led the government to embark on a process of economic reforms in 1991. These reforms sought to remedy the fiscal and trade imbalances in order to accelerate economic growth. Trade policy reform was given priority. Import bans and quotas were eliminated, import duties abolished and a compensatory tax on commodities sold in the domestic market instituted. This study analyzes the effects of the trade policy reforms using a computable general equilibrium (CGE) model and household survey data. Results show that these reforms are more beneficial to households in urban areas, but contribute to worsening poverty conditions of the most poor in rural areas. If liberalization policies target better strategies aimed at fighting poverty, or at least not deteriorating the situation, they need to be designed in a way that they do not worsen the poverty conditions of the most destitute in society.
    Keywords: CGE, trade, poverty, Benin
    JEL: D6 F13 F14 H3 I38 O55
    Date: 2008
  6. By: Soo Jung Ha, Hewings, Geoffrey, and Turner, Karen (Department of Economics, University of Strathclyde); Geoffrey Hewings (Regional Economics Applications Laboratory, University of Illinois, US); Karen Turner (Department of Economics, University of Strathclyde)
    Abstract: Our current research program is concerned with developing regional and interregional computable general equilibrium models for Chicago and the Midwest respectively. One of the main concerns associated with regional CGE modeling is determination of the empirical parameters of models, particularly elasticities and share parameters. A common problem is the lack of appropriate regional data for econometric estimation. Consequently, it is important to identify key parameters that are likely to be important in determining quantitative results and prioritise these for estimation where appropriate data are available. In this paper we focus on estimating regional trade (import) substitution parameters, both because these will generally be important in analysis for regional economies, which tend to be more open than national economies, and also because one of the main areas of our current research is to model the pollution content of trade flows between regions and the impacts on pollution ‘trade balances’ in response to changes in activity. While our work will eventually encompass the five Midwest states of Illinois, Indiana, Michigan, Ohio and Wisconsin, our first step in the process of parameter estimation for our intended suite of regional and interregional CGE models is to estimate commodity import elasticities for the Illinois economy (to be applied also to our single region Chicago model, in the absence of appropriate data for region-specific estimation at that level). We apply a model where we take account of market size and distance in estimating the substitutability between commodities produced in Illinois and other US states.
    Keywords: general equilibrium model, regional modelling, import elasticity
    JEL: C68 R13 F10
    Date: 2008–10
  7. By: Dorothée Boccanfuso (GREDI, Faculte d'administration, Université de Sherbrooke); Luc Savard (GREDI, Faculte d'administration, Université de Sherbrooke)
    Abstract: In this paper we use a CGE macro-micro modelling approach to analyse the distributional impact of the food crisis and to examine a couple of policy responses in two neighbouring West African countries. Both countries are strongly dependent on agriculture; both have similar climates and share many other features. However, the approach we use captures structural differences at both the macro level and the micro level for household income and expenditure structures. Our results reveal surprising and significant differences for poverty impact at the national and sub-group levels, as well as for inequality and pro-poor analysis. These differences are present for the world price increase of agricultural goods as well as policy responses to the food crisis. Our results highlight the importance of country-specific analysis and the risk of extrapolating conclusions from one country to another.
    Keywords: Impact analysis, computable general equilibrium modeling, food crisis, Africa
    JEL: D58 I32 O57 Q18 R13
    Date: 2008
  8. By: Prakash Raj Sapkota; John Cockburn
    Abstract: Nepal aggressively liberalized its foreign trade during the 1990s. This paper attempts to estimate the impact of trade liberalization on household welfare and poverty in Nepal through the construction of a regional CGE model. The model disaggregates factors of production - capital, land, and labor - by region (urban, Terai and hills/mountains) in order to establish direct links between sector of activity, factor remuneration, and household income. In particular, certain activities are more intensive in factors from a given region (e.g. the manufacturing sector is more intensive in urban factors of production and the agriculture sector is more intensive in Terai factor of production). Regional factor remuneration in turn maps into regional household income. We find that trade liberalization reduces the nominal returns to urban factors of production in comparison with rural factors of production, resulting in a reduction in the relative income of urban households. Rural and urban households consume roughly the same share of industrial goods, but rural households consume relatively more agricultural goods and fewer services. As the fall in consumer prices in the latter two sectors are similar, there is little rural-urban difference in the variation in consumer price indices. Consumer prices generally fall in roughly the same proportion as nominal incomes such that there are negligible welfare changes. However, poverty falls substantially, with the greatest impact in rural Terai, followed by the rural hills and the mountain region, and least in urban areas.
    Keywords: Computable general equilibrium modeling, international trade, poverty, Nepal
    JEL: D33 D58 E27 F13 F14 I32 O15 O53
    Date: 2008

This nep-cmp issue is ©2008 by Stan Miles. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.