nep-cmp New Economics Papers
on Computational Economics
Issue of 2009‒03‒28
seventeen papers chosen by
Stan Miles
Thompson Rivers University

  1. Trade Liberalisation and Poverty in Bangladesh: A General Equilibrium Approach By Nahar, Bodrun; Siriwardana, Mahinda
  2. Column generation with dynamic duty selection for railway crew rescheduling By Potthoff, D.; Huisman, D.; Desaulniers, G.
  3. Agglomeration, migration, and regional growth: A CGE analysis for Uganda By Dorosh, Paul; Thurlow, James
  4. The tariff reduction on Agricultural sector in Iran By Salarpour, Mashallah; Hasanpour, Hadi
  5. Future Waste Scenarios for Sweden based on a CGE-model By Sjöström, Magnus; Östblom, Göran
  6. Impact of Infrastructure Spending in Mali: A CGE Modeling Approach By Antonio Estache; Jean-François Perrault; Luc Savard
  7. Economic Lot-Sizing Problem with Bounded Inventory and Lost-Sales By Hwang, H-C.
  8. Convergence in the Finite Cournot Oligopoly with Social and Individual Learning By Thomas Vallée; Murat Yildizoglu
  9. Constructing a Social Accounting Matrix for Sardinia By Guido Ferrari; Giorgio Garau; Patrizio Lecca
  10. Building aggregate timber supply models from individual harvest choice By Polyakov, Maksym; Wear, David N.; Huggett, Robert
  11. On the alignment of lot sizing decisions in a remanufacturing system in the presence of random yield By Tobias Schulz; Ivan Ferretti
  12. Can Markets Compute Equilibria? By Hunter K. Monroe
  13. Establishing a benefits transfer database for biosecurity decision making an indigenous biodiversity By Bell, Brian; Cudby, Charlotte; Yap, Michael
  14. The Two-Dimensional, Rectangular, Guillotineable-Layout Cutting Problem with a Single Defect By Vera Neidlein; Andrèa C. G. Vianna; Marcos N. Arenales; Gerhard Wäscher
  15. An agro-economic model to analyse climate change impacts on farmers’ income By Jiang, Qiang
  16. A Correction Function Approach to Solve the Incidental Parameter Problem By Li, GuangJie; Leon-Gonzalez, Roberto
  17. Choice-Based Network Revenue Management under Weak Market Segmentation By Joern Meissner; Arne Strauss

  1. By: Nahar, Bodrun; Siriwardana, Mahinda
    Abstract: This paper uses a computable general equilibrium (CGE) model to investigate the impact on poverty of trade liberalisation in Bangladesh. The simulation results show that the complete removal of tariffs favours export oriented sectors in the economy. With trade liberalisation, rural and urban areas experience an overall reduction in poverty in the short run. However, a marginal increase in the poverty gap and poverty severity for urban areas is projected, implying that the poor become poorer in urban areas. Moreover, poverty incidences vary among various socio-economic groups. In the short run, poverty incidence increases for rural landless and urban illiterate and low-educated household groups. In contrast, the long run results highlight that trade liberalisation reduces absolute poverty for all groups both in rural and urban areas.
    Keywords: Trade Liberalisation, Poverty, Bangladesh, Computable General Equilibrium (CGE) model.,
    Date: 2009
  2. By: Potthoff, D.; Huisman, D.; Desaulniers, G. (Erasmus Econometric Institute)
    Abstract: The Dutch railway network experiences about three large disruptions per day on average. In this paper, we present an algorithm to reschedule the crews when such a disruption occurs. The algorithm is based on column generation techniques combined with Lagrangian heuristics. Since the number of duties is very large in practical instances, we first define a core problem of tractable size. If some tasks remain uncovered in the solution of the core problem, we perform a neighborhood exploration to improve the solution. Computational experiments with real-life instances show that our method is capable of producing good solutions within a couple of minutes of Computation time.
    Date: 2009–01–14
  3. By: Dorosh, Paul; Thurlow, James
    Abstract: "Uganda has experienced rapid economic growth and poverty reduction over the past decade but has failed to significantly improve incomes in its northern regions where prolonged conflict has hindered growth. We consider three strategies to close this regional divide: (1) develop a north-south corridor to encourage regional trade, (2) accelerate growth in the southern capital city and encourage north-south migration, and (3) improve agricultural productivity in rural areas. We examine these strategies using a regionalized computable general equilibrium model, accounting for internal migration and productivity gains from urban agglomeration effects. Simulation results indicate that a north-south corridor benefits northern households, but its benefits are limited by the small size of northern urban centers and the low productivity of northern producers. Investing in the capital city accelerates economic growth but has little effect on other regions' welfare because of the city's weak growth linkages with other regions and small migration effects. Improving agricultural productivity, however, though less effective at stimulating national economic growth, generates broad-based welfare improvements in both rural and urban areas. We therefore conclude that without significant gains in agricultural productivity in the next decade, out-migration and urban-led growth centered in Kampala will be insufficient to significantly reduce poverty in northern Uganda. " from authors' abstract
    Keywords: economic growth, Poverty, Agricultural development, Spatial economics, Development strategies,
    Date: 2009
  4. By: Salarpour, Mashallah; Hasanpour, Hadi
    Abstract: This study explains the results of trade reforms for a scenario where reduced tariffs for all imported commodities under the Uruguay Round (UR) since 1995. The Computable General Equilibrium (CGE) analysis and input-output data for Iran using a base year, 1991, were applied simulating the short and long-run effects under the UR. It was proposed that 24 per cent and 27 per cent decreases in ad valorem tariffs on imported agricultural and non-agricultural commodities, respectively, could occur in the short run from 1995. The same scenario was simulated in the long run to examine the impact of trade reforms on Iran for the past decade. Three crops results of this scenario were analysed by considering the projections. The results confirm a positive impact on the economy of Iran if tariffs were reduced under the UR. The domestic prices and production costs would fall and primary factors such as labour and capital would move to industries which have a greater comparative advantage. Rice was estimated to grow by 2.98 per cent but sugar beet and sugar cane decreased by 1.02 per cent in the short run.
    Keywords: Tariff reduction, CGE Model, Uruguay Round (UR), Iranian economy, Agricultural products,
    Date: 2009
  5. By: Sjöström, Magnus (National Institute of Economic Research); Östblom, Göran (National Institute of Economic Research)
    Abstract: Over the last decades, waste quantities have grown steadily in close relation to economic growth. To tackle the problem of continuing waste growth within the EU, waste prevention was listed among four top priorities in the EU Sixth environment Action Programme. A Computable General Equilibrium (CGE) model is here used for projecting future quantities of hazardous and non-hazardous waste in Sweden to 2030. The effects of driving forces behind waste generation are illustrated by comparing the results of waste projections for a Baseline scenario and four alternative scenarios. The scenarios differ mainly in GDP growth rates and in the assumptions about future waste intensities of the economic activities of firms and households. We use a high-resolution data set on waste flows of 18 various types of non-hazardous waste and 16 various types of hazardous waste attributed to six waste-generating sources for the base year 2006. Waste generated in the scenarios, thus, relate to firms’ material input, output, employees, capital scrapping and fuel combustion as well as households’ consumption. The impact of economic growth in increasing the generation of nonhazardous and hazardous waste is apparent when comparing the growth of waste from 2006 to 2030 in the five scenarios. On the contrary, technological change resulting in less waste intensive production processes and changed behaviour among households, making their activities less waste intensive, have a strong reducing effect, especially on generation of non-hazardous waste relating to firms’ material input.
    Keywords: general equilibrium model; waste generation; decoupling; waste intensities waste scenarios.
    JEL: C68 D20 H23 R48
    Date: 2009–02–28
  6. By: Antonio Estache; Jean-François Perrault; Luc Savard
    Abstract: In this paper we construct a standard CGE model to explore the impact of scaling up infrastructure in an African country. As the debate on the importance of scaling up infrastructure to stimulate growth and provide a push to African economies, some analyst raise concern on financing these infrastructures after construction and that external funding of these can create major distortion and have a negative impact on the trade balance of these countries. This study aims to provide so insight into this debate. It draws from the infrastructure productivity literature to postulate positive productive externalities of new infrastructure and Fay and Yepes (2003) for operating cost associated with new infrastructure. We compare various infrastructure investment funded with different fiscal tools. These investments scenarios are compared to non productive investment that can be interpreted as a business as usual scenario. Our results show that foreign aid does produce Dutch disease effects but the negative impacts are strongly dependent on the type of investments performed. Moreover, growth effects contribute to attenuate the negative effects.
    Keywords: Investment externalities, foreign aid, exchange rate, fiscal reforms
    JEL: C68 E62 F35 H54
    Date: 2009
  7. By: Hwang, H-C. (Erasmus Econometric Institute)
    Abstract: In this paper we consider an economic lot-sizing problem with bounded inventory and lost-sales. Different structural properties are characterized based on the system parameters such as production and inventory costs, selling prices, and storage capacities. Using these properties and the results on the lot-sizing problems with bounded inventory, we present improved and new algorithms for the problem. Specifically, we provide algorithms for the general lot-sizing problem with bounded inventory and lost-sales, the lot-sizing problem with nonincreasing selling prices and the problem with only lost-sales.
    Keywords: Economic lot-sizing;Lost-Sales;Inventory and Production;Algorithms
    Date: 2009–06–01
  8. By: Thomas Vallée (LEMNA - Université de Nantes); Murat Yildizoglu (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)
    Abstract: Convergence to the Nash equilibrium in a Cournot oligopoly is a question that recurrently arises as a subject of controversy in economics. The development of evolutionary game theory has provided an equilibrium concept more directly connected with adjustment dynamics, and the evolutionary stability of the equilibria of the Cournot game has been extensively studied in the literature. Several articles show that the Walrasian equilibrium is the stable ESS of the Cournot game. But no general result has been established for the difficult case of simultaneous heterogenous mutations.Authors propose specific selection dynamics to analyze this case. Vriend (2000) proposes using a genetic algorithm for studying learning dynamics in this game and obtains convergence to Cournot equilibrium with individual learning. The resulting convergence has been questioned by Arifovic and Maschek (2006). The aim of this article is to clarify this controversy: it analyzes the mechanisms that are behind these contradictory results and underlines the specific role of the spite effect. We show why social learning gives rise to the Walrasian equilibrium and why, in a general setup, individual learning can effectively yield convergence to the Cournot equilibrium. We also illustrate these general results by systematic computational experiments.
    Keywords: Cournot oligopoly; Learning; Evolution; Selection; Evolutionary stability; Nash equilibrium; Genetic algorithms
    Date: 2009–03–15
  9. By: Guido Ferrari; Giorgio Garau; Patrizio Lecca
    Abstract: Recently, the Social Accounting Matrix (SAM) has been resurrected as a policy analysis tool and, in the last decade, attention has been paid to SAM multipliers, as well as to the use of the SAM as a benchmark for computable general equilibrium models. This paper constructs a SAM for the regional economy of Sardinia that can be used for policy evaluation and impact analysis. A mixture of approaches is used from simple compilation and decomposition methods to procedures for matrix estimations and matrix balancing.
    Keywords: Social Accounting Matrix, Input-Output, Doubly Constrained Minimum Information (MI) Model, Cross Entropy, Regional Account System.
    JEL: C16 C67 E01
    Date: 2009
  10. By: Polyakov, Maksym; Wear, David N.; Huggett, Robert
    Abstract: Timber supply has traditionally been modelled using aggregate data. In this paper, we build aggregate supply models for four roundwood products for the US state of North Carolina from a stand-level harvest choice model applied to detailed forest inventory. The simulated elasticities of pulpwood supply are much lower than reported by previous studies. Cross price elasticities indicate a dominant influence of sawtimber markets on pulpwood supply. This approach allows predicting the supply consequences of exogenous factors and supports regular updating of supply models.
    Keywords: Timber supply, harvest choice, conditional logit, elasticity, expectations, simulation.,
    Date: 2009
  11. By: Tobias Schulz (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Ivan Ferretti (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: In the area of reverse logistics, remanufacturing has been proven to be a valu- able option for product recovery. In many industries, each step of the products’ recovery is carried out in lot sizes which leads to the assumption that for each of the different recovery steps some kind of fixed costs prevail. Furthermore, holding costs can be observed for all recovery states of the returned product. Although several authors study how the different lot sizes in a remanufacturing system shall be determined, they do not consider the specificity of the remanufacturing process itself. Thus, the disassembly operations which are always neglected in former analyses are included in this contribution as a specific recovery step. In addition, the assumption of deterministic yields (number of reworkable compo- nents obtained by disassembly) is extended in this work to study the system behavior in a stochastic environment. Three different heuristic approaches are presented for this environment that differ in their degree of sophistication. The least sophisticated method ignores yield randomness and uses the expected yield fraction as certainty equivalent. As a numerical experiment shows, this method already yields fairly good results in most of the investigated problem instances in comparison to the other heuristics which incorporate yield uncertainties. How- ever, there exist instances for which the performance loss between the least and the most sophisticated heuristic amounts to more than 6%.
    Keywords: reverse logistics, remanufacturing, lot sizing, disassembly, random yield
    Date: 2008–12
  12. By: Hunter K. Monroe
    Abstract: Recent turmoil in financial and commodities markets has renewed questions regarding how well markets discover equilibrium prices, particularly when those markets are highly complex. A relatively new critique questions whether markets can realistically find equilibrium prices if computers cannot. For instance, in a simple exchange economy with Leontief preferences, the time required to compute equilibrium prices using the fastest known techniques is an exponential function of the number of goods. Furthermore, no efficient technique for this problem exists if a famous mathematical conjecture is correct. The conjecture states loosely that there are some problems for which finding an answer (i.e., an equilibrium price vector) is hard even though it is easy to check an answer (i.e., that a given price vector is an equilibrium). This paper provides a brief overview of computational complexity accessible to economists, and points out that the existence of computational problems with no best solution algorithm is relevant to this conjecture.
    Keywords: Capital markets , Commodity markets , Prices , Economic models ,
    Date: 2009–02–10
  13. By: Bell, Brian; Cudby, Charlotte; Yap, Michael
    Abstract: An imbalance of quantitative information on pest and disease impacts hampers biosecurity decision-making; there is relatively good information about impacts on industry, but relatively poor information about how society values the impacts on indigenous biodiversity. A benefits transfer process based on a database of choice experiments could help to redress this imbalance. This paper: briefly reviews four choice experiments that will be the foundation of a database; reviews benefit transfer literature; and sets out framework ideas for a Decision Support System (DSS), which will incorporate biodiversity values via a process for benefit transfer to facilitate more informed biosecurity decisions.
    Keywords: Benefit transfer, database, biosecurity, biodiversity, decision support system,
    Date: 2009
  14. By: Vera Neidlein (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Andrèa C. G. Vianna (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Marcos N. Arenales (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Gerhard Wäscher (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: In this paper, a two-dimensional cutting problem is considered in which a single plate (large object) has to be cut down into a set of small items of maximal value. As opposed to standard cutting problems, the large object contains a defect, which must not be covered by a small item. The problem is represented by means of an AND/OR-graph, and a Branch & Bound procedure (including heuristic modifications for speeding up the search process) is introduced for its exact solution. The proposed method is evaluated in a series of numerical experiments that are run on problem instances taken from the literature, as well as on randomly generated instances.
    Keywords: Two-dimensional cutting, defect, AND/OR-graph, Branch & Bound
    Date: 2008–12
  15. By: Jiang, Qiang
    Abstract: The increasing interests in climate change heighten the need for an agro-economic model to analyse climate change impacts on farmers’ incomes. Many researchers have turned to crop yield response models to estimate farmers’ yield and income loss. A classic method used by economists to establish yield response models is to build up the statistic relationship between historical yield changes and climate change through regression models. However, without comprehensive experimental data from each region such as crop yields response to CO2 concentration, these crop-yield response models may provide misleading predications. An alternative approach is the use of crop biophysical simulation models. Based one biophysical model Agricultural production systems simulator (APSIM), we develope an agro-economic model, WATER-BIOMASS DYNAMI, to simulate the change of crop yields and farmers' income affected by varied climate change scenarios and other economic factors. We used the WATER-BIOMASS DYNAMIC model to analyse the agricultural economic impacts of four climate change scenarios in the Australian Wagga Wagga wheat production area.
    Keywords: APSIM, Climate change, agricultural economics, wheat,
    Date: 2009
  16. By: Li, GuangJie (Cardiff Business School); Leon-Gonzalez, Roberto
    Abstract: Following Lancaster (2002), we propose a strategy to solve the incidental parameter problem. The method is demonstrated under a simple panel Poisson count model. We also extend the strategy to accomodate cases when information orthogonality is unavailable, such as the linear AR(p) panel model. For the AR(p) model, there exists a correction function to fix the incidental parameter problem when the model is stationary with strictly exogenous regressors. MCMC algorithms are developed for parameter estimation and model comparison. The results based on the simulated data sets suggest that our method could achieve consistency in both parameter estimation and model selection.
    Keywords: dynamic panel data model with fixed effect; incidental parameter problem; consistency in estimation; model selection; Bayesian model averaging; Markov chain Monte Carlo (MCMC)
    JEL: C52 C11 C12 C13 C15
    Date: 2009–03
  17. By: Joern Meissner (Department of Management Science, Lancaster University Management School); Arne Strauss (Department of Management Science, Lancaster University Management School)
    Abstract: We present improved network revenue management methods that assume customers to choose according to the multinomial logit choice model with the specific feature that the sets of considered products of the different customer segments are allowed to overlap. This approach can be used to model markets with weak segmentation: For example, high-yield customer segments can be modelled to also consider low yield products intended for low-yield customers, introducing implicit buy-down behavior into the model. The arising linear programs are solved using column generation and involves NP-hard mixed integer sub problems. However, we propose efficient polynomial-time heuristics that considerably speed-up the solution process. We numerically investigate the effect of varying the intensity of overlap on the respective policies and find that improvements are most pronounced in the case of high overlap, rendering the method highly interesting for weakly segmented market applications.
    Keywords: revenue management, dynamic programming, optimal control, applications, approximate
    JEL: C61
    Date: 2009–03

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