New Economics Papers
on Computational Economics
Issue of 2009‒02‒07
five papers chosen by

  1. The Benefits and Problems of Linking Micro and Macro Models - Evidence from a Flat Tax Analysis By Peichl A
  2. Policy Advice Derived From Simulation Models By Brenner, Thomas; Werker, Claudia
  3. Implicit Microfoundations for Macroeconomics By Wright, Ian
  4. Productivity Shocks and National Food Security for Japan By TANAKA Tetsuji; HOSOE Nobuhiro
  5. Effect of Corn Price on Profitability of Control Vs Phytase Enhanced Diet of Hogs By Atreya, Ajita; Vitale, Jeffrey D.; Stoecker, Arthur L.; Carter, Scott D.

  1. By: Peichl A (Institute for the Study of Labor (IZA))
    Abstract: The aim of this paper is to describe the state-of-the-art in simulation and to illustrate benefits and problems of linking micro and macro models by analysing flat tax proposals for Germany. The analysis shows that a personal income flat tax can indeed overcome the fundamental equity efficiency trade-off while simultaneously increasing the tax revenue. However, this result does not hold for a flat tax combining a personal income flat tax with a corporate cash flow flat tax, even when allowing for an ex-post loss in revenue as the top of the distribution still gains the most.
    Date: 2009–01–28
  2. By: Brenner, Thomas; Werker, Claudia
    Abstract: When advising policy we face the fundamental problem that economic processes are connected with uncertainty and thus policy can err. In this paper we show how the use of simulation models can reduce policy errors. We suggest that policy is best based on so-called abductive simulation models, which help to better understand how policy measures can influence economic processes. We show that abductive simulation models use a combination of theoretical and empirical analysis based on different data sets. This helps inferring empirically reliable and meaningful statements about how policy measures influence economic processes. By way of example we show how research subsidies by the government influence the likelihood that a regional cluster emerges.
    Keywords: Policy Advice, Simulation Models, Uncertainty, Methodology
    JEL: C63 B52 H89 B41
    Date: 2009–01–01
  3. By: Wright, Ian
    Abstract: A large market economy has a huge number of degrees of freedom with weak microlevel coordination. The ‘implicit microfoundations’ approach assumes this property of micro-level interactions more strongly conditions macro-level outcomes compared to the precise details of individual choice behavior; that is, the ‘particle’ nature of individuals dominates their ‘mechanical’ nature. So rather than taking an ‘explicit microfoundations’ approach, in which individuals are represented as ‘white-box’ sources of fully-specified optimizing behavior (rational agents), we instead represent individuals as ‘black box’ sources of unpredictable noise subject to objective constraints (zero-intelligence agents). To illustrate the potential of the approach we examine a parsimonious, agent-based macroeconomic model with implicit microfoundations. It generates many of the reported empirical distributions of capitalist economies, including the distribution of income, firm sizes, firm growth, GDP and recessions.
    Keywords: Micro foundations, macroeconomics, aggregation, power laws
    JEL: A12 B41 C63 D50 E11 P16
    Date: 2008
  4. By: TANAKA Tetsuji; HOSOE Nobuhiro
    Abstract: Agriculture is the focus of much contention in free trade negotiations. The Japanese government is against liberalizing the rice trade on the grounds that it would threaten "national food security" in the events of such shocks as crop failure, war, and embargo. Trade liberalization is expected to make Japan more dependent upon food imports and to make the Japanese economy more susceptible to these risks. Using a stochastic computable general equilibrium model, we conducted Monte Carlo simulations to quantify impact of rice productivity shocks and export quotas by major rice exporters to Japan and found little chance for trade liberalization for Japan to suffer from such shocks.
    Date: 2009–04
  5. By: Atreya, Ajita; Vitale, Jeffrey D.; Stoecker, Arthur L.; Carter, Scott D.
    Abstract: Economic Simulation model (SIMETAR) was used to investigate the effect of future corn price on profitability of control and phytase enhanced diet of hogs. The completed simulation model was used to estimate probability distribution for control vs lower excretion diet profitability under different corn prices. Data used was collected from recent field trials in Oklahoma that tested the effect of phytase enhanced diets on reducing phosphorus emission. The results showed that as the market price of corn increases control diet will be more profitable than phytase enhanced diet, given the cost of other remaining feed ingredient is constant for both the diets.
    Keywords: profitability, SIMETAR, control diet, phytase enhanced diet, swine, Production Economics,
    Date: 2009

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