New Economics Papers
on Computational Economics
Issue of 2009‒02‒22
nine papers chosen by

  1. Genetic algorithms for single machine scheduling with quadratic earliness and tardiness costs By Jorge M. S. Valente; Maria R. A. Moreira; Alok Singh; Rui A. F. S. Alves
  2. Trade liberalization, poverty and food security in India abstract: This paper attempts to assess the impact of trade By Manoj K. Panda; A. Ganesh Kumar
  3. Solving the incomplete markets model with aggregate uncertainty using the Krusell-Smith algorithm By Lilia Maliar; Fernando Valli; Serguei Maliar
  4. Enhancing Agriculture and Energy Sector Analysis in CGE Modelling: An Overview of Modifications to the USAGE Model By R. Ashley P. Winston
  5. CAPP_DYN: A Dynamic Microsimulation Model for the Italian Social Security System By Carlo Mazzaferro; Marcello Morciano
  6. Policy dilemmas in India: The Impact of changes in agricultural prices on rural and urban poverty By Sandra Polaski et al
  8. International Trade and the Negotiability of Global Climate Change Agreements By John Whalley; Yuezhou Cai; Raymond Riezman
  9. Block Recursive Equilibria for Stochastic Models of Search on the Job By Guido Menzio; Shouyong Shi

  1. By: Jorge M. S. Valente (LIAAD - INESC Porto L. A., Faculdade de Economia, Universidade do Porto, Portugal); Maria R. A. Moreira (EDGE, Faculdade de Economia, Universidade do Porto, Portugal); Alok Singh (Department of Computer and Information Sciences, University of Hyderabad, Indi); Rui A. F. S. Alves (Faculdade de Economia, Universidade do Porto, Portugal)
    Abstract: In this paper, we consider the single machine scheduling problem with quadratic earliness and tardiness costs, and no machine idle time. We propose a genetic approach based on a random key alphabet, and present several algorithms based on this approach. These versions differ on the generation of both the initial population and the individuals added in the migration step, as well as on the use of local search. The proposed procedures are compared with the best existing heuristics, as well as with optimal solutions for the smaller instance sizes. The computational results show that the proposed algorithms clearly outperform the existing procedures, and are quite close to the optimum. The improvement over the existing heuristics increases with both the difficulty and the size of the instances. The performance of the proposed genetic approach is improved by the initialization of the initial population, the generation of greedy randomized solutions and the addition of the local search procedure. Indeed, the more sophisticated versions can obtain similar or better solutions, and are much faster. The genetic version that incorporates all the considered features is the new heuristic of choice for small and medium size instances.
    Keywords: scheduling, single machine, quadratic earliness and tardiness, genetic algorithms
    Date: 2009–02
  2. By: Manoj K. Panda (Indira Gandhi Institute of Development Research); A. Ganesh Kumar (Indira Gandhi Institute of Development Research)
    Abstract: This paper attempts to assess the impact of trade liberalization on growth, poverty, and food security in India with the help of a national level computable general equilibrium (CGE) model. It shows that GDP growth and income poverty reduction that might occur following trade liberalization need not necessarily result in an improvement in the food security / nutritional status of the poor. Evidence from simulations of (partial) trade reforms reflecting a possible Doha-like scenario show that the bottom 30 of the population in both rural and urban areas suffer a decline in calorie and protein intake, in contrast to the rest of the population, even as all households increase their intake of fats. Thus, the outcome on food security / status with regard to individual nutrients depends crucially on the movements in the relative prices of different commodities along with the change in income levels. These results show that trade policy analysis should consider indicators of food security in addition to overall growth and poverty traditionally considered in such studies.
    Keywords: Doha negotiations, India trade policy, Poverty, Food security, CGE model
    JEL: F13 F14 O15 O53
    Date: 2008–06
  3. By: Lilia Maliar (Universidad de Alicante); Fernando Valli (Universidad de Alicante); Serguei Maliar (Universidad de Alicante)
    Abstract: This paper studies the properties of the solution to the heterogeneous agents model in Den Haan, Judd and Juillard (2008). To solve for the individual policy rules, we use an Euler-equation method iterating on a grid of prespecified points. To compute the aggregate law of motion, we use the stochastic-simulation approach of Krusell and Smith (1998). We also compare the stochastic- and non-stochastic-simulation versions of the Krusell-Smith algorithm, and we find that the two versions are similar in terms of their speed and accuracy.
    Date: 2009–01
  4. By: R. Ashley P. Winston
    Abstract: This paper describes some key developments to USAGE, a dynamic computable general equilibrium (CGE) model of the US economy, aimed at enhancing its utility in agricultural and bio-fuels/bio-energy analysis. The USAGE model is a large-scale dynamic CGE model of the US economy developed by the Centre of Policy Studies at Monash University in collaboration with the US International Trade Commission (USITC), and has been updated and modified for this study with assistance from the Economic Research service of the US Department of Agriculture (ERS-USDA). Additional sectoral detail and theory are developed and applied to USAGE, including a detailed modeling of land use in US agriculture involving 72 types of land, the explicit modeling of TRQ policies and by-product biomass supply (such as crop residues) using nested complementarity relationships, and careful accounting for subsidies in US ethanol production and their effects on public revenue streams.
    Keywords: USAGE, US agriculture, by-product biomass supply, complementarity relationships, ethanol production
    JEL: Q24 Q42 Q48 C68
    Date: 2009–01
  5. By: Carlo Mazzaferro; Marcello Morciano
    Abstract: We present the technical structure of CAPP_DYN, a population based dynamic microsimulation model for the analysis of long term redistributive effects of social policies, developed at CAPP (Centro di Analisi delle Politiche Pubbliche) to study the intergenerational and the intragenerational redistributive effects of reforms in the social security system. The model simulates probabilistically the socio-demographic and economic evolution of a representative sample of the Italian population for the period 2005-2050. After a short review of the existing similar models for the Italian economy, a rather detailed analysis and discussion of the functioning of the model as well as a description of estimation procedures employed in each single module of the models is offered.
    Keywords: Dynamic microsimulation; lifetime and intragenerational redistribution; social security systems
    JEL: C51 C52 H55
    Date: 2008–10
  6. By: Sandra Polaski et al (Carnegie Endowment for International Peace; Indira Gandhi Institute of Development Research)
    Abstract: Trade policy reforms which lead to changes in world prices of agricultural commodities or domestic policies aimed at affecting agricultural prices are often seen as causing a policy dilemma: a fall in agricultural prices benefits poor urban consumers but hurts poor rural producers, while a rise yields the converse. Poor countries have argued that they need to be able to use import protection and/or price support policies to protect themselves against volatility in world agricultural prices in order to dampen these effects. In this paper, we explore this dilemma in a CGE model of India that uses a new social accounting matrix (SAM) developed at the Indira Ghandi Institute of Development Research (IGIDR) in Mumbai. The SAM includes extensive disaggregation of agricultural activities, commodity markets, labor markets, and rural and urban households. This SAM includes 115 commodities, 48 labor types and 352 types of households, (classified by social group, income class, region, and urban/rural). The CGE model based on this SAM can be used to explore the linkages between changes in world prices of agriculture and the incomes of poor rural and urban households, capturing rural-urban linkages in both commodity and factor markets. The results indicate that the inclusion of linkages between rural and urban labor markets is necessary to fully explore, and potentially eliminate, the dilemma. A fall in agricultural prices hurts agricultural producers, lowers wages and/or employment of rural labor, and in some cases spills over into urban labor markets, depressing wages and incomes of poor urban households as well. In these cases both rural and urban poverty increases. The paper explores the strength of these commodity and factor market linkages, and the potential spillover effects of policies affecting agricultural prices.
    Keywords: Doha negotiations, India trade policy, World prices, Labour market, CGE model
    JEL: F13 F14 F16 O24 O53
    Date: 2008–06
  7. By: Perry, Miles
    Abstract: World trade in biomass is likely to increase in the years up to 2020 as imports are required to meet the demand created (directly or indirectly) by policy measures such as the EU Biofuels Directive. This paper assesses the macroeconomic consequences such large-scale trade for the exporting country, using a computable general equilibrium (CGE) model of Argentina. Given an exogenous increase in world prices for biomass, the model finds that production shifts towards biomass and away from other sectors. Implications of this include changes in the relative prices of goods and the purchasing power of labour. Price rises are largest in land-intensive sectors of the economy and the overall purchasing power of labour is adversely affected since biomass sectors are among the least labour intensive. When expansion of the agricultural area is permitted, relative price changes become less pronounced. However, expansion of the agricultural frontier may have adverse environmental impacts, including lowering the net GHG savings attributable to the biomass produced.
    Keywords: CGE; Biofuels; Argentina
    JEL: F18 Q17 Q5 D58
    Date: 2008–06–05
  8. By: John Whalley; Yuezhou Cai; Raymond Riezman
    Abstract: Country incentives to participate in cooperative arrangements which either fully or partially internalize climate change externalities from carbon emissions involve critical asymmetries. Small countries trade off own country costs of carbon mitigation actions against their own benefits from global improvements in climate which benefit all. Small countries thus have limited incentive to participate as their actions, while costly to them, have a significant impact on global temperature change which mainly benefits others. Here we build on the work of Shapley and Shubik (1969) which suggests that the core of a global warming game without transferable utility may be empty and use numerical simulation methods to analyse country incentives to participate in carbon emission limitation negotiations using a micro global warming structure related to that used by Uzawa(2003).We discuss how the presence of international trade in goods affects the willingness of countries to join international negotiations on climate change. We calibrate our simulation structure to business as usual scenarios for the period 2006-2036. We go significantly beyond the PAGE model relied on in the Stern (2006) report in capturing multi-country interactive effects on the benefit side of climate change mitigation. We show how the perceived severity of global climate change damage influences participation decisions, and importantly how international trade makes participation more likely.
    JEL: F13 Q54
    Date: 2009–02
  9. By: Guido Menzio; Shouyong Shi
    Abstract: In this paper, we develop a general stochastic model of directed search on the job. Analogous to models of random search on the job, the state of the economy in our model includes the infinite-dimensional distribution of workers across different employment states (unemployment, and employment at different wages). Unlike the models of random search on the job, our model admits an equilibrium in which agents' value and policy functions do not depend on the distribution of workers. We refer to this type of equilibrium as a Block Recursive Equilibrium (BRE). Therefore, while solving the equilibrium of a random search model in a stochastic environment is a difficult task both analytically and computationally, solving the Block Recursive Equilibrium of our model is as easy as solving a representative agent model. We prove existence of a BRE under various specifications of workers' preferences and contractual environments, including dynamic contracts and fixed-wage contracts.
    Keywords: Directed Search; On the Job Search; Heterogeneity; Aggregate Fluctuations
    JEL: E24 E32 J64
    Date: 2009–02–13

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