New Economics Papers
on Computational Economics
Issue of 2009‒07‒11
six papers chosen by

  1. An Algorithm for the Simulation of Bounded Rational Agents By Schuster, Stephan
  2. Impact of Informal Re-exports between Benin and Nigeria: A CGE analysis By Mathieu Paquet; Luc Savard
  3. Linking a Dynamic CGE Model and a Microsimulation Model: Climate Change Mitigation Policies and Income Distribution in Australia By Hielke Buddelmeyer; Nicolas Hérault; Guyonne Kalb; Mark van Zijll de Jong
  4. The impact of boundary organizations on decision-making under uncertainty: a multi-agent simulation By Denis Boissin
  5. How do improvements in labour productivity in the Scottish economy affect the UK position on the Environmental Kuznets Curve? By Karen Turner; Nick Hanley
  6. How Much Are We Willing To Pay to Send Poor Adolescents to School? Simulating Changes to Mexico`s Oportunidades in Urban Areas By Viviane Azevedo; Cesar Bouillon; Patricia Yanez-Pagans

  1. By: Schuster, Stephan
    Abstract: Non-classical models of economic behaviour, usually summarised under the notion of 'Bounded Rationality' criticise the assumptions of the standard economic model - hyperrationality, perfect and costless information, and unlimited mental processing capabilities. However, alternative approaches have either remained very simple or purely descriptive. Here, a computational approach is presented based on Simon's concept of bounded rationality and satisficing as a compromise between the oversimplification of analytical and the descriptiveness of rich cognitive models.
    Keywords: agent based modelling; bounded rationality; reinforcement learning; rule extraction
    JEL: C63 D83
    Date: 2009–06–27
  2. By: Mathieu Paquet (GREDI, Faculte d'administration, Université de Sherbrooke); Luc Savard (GREDI, Faculte d'administration, Université de Sherbrooke)
    Abstract: Ever since the end of the Biafra war, re-exportation has become an important economic activity for Benin’s economy. One of the reasons for the existence of this type of commerce resides in the disparity in economic policies between Benin and Nigeria. We model this sector and its interrelations with the remainder of the economy as well as on public finances. A CGE model was developed with data from Benin’s social accounting matrix for 1999. In the model, we distinguished between formal and informal households (households that work in the informal sector) and a distinction was incorporated into the model in regards of the re-exportation industry by dividing the latter into its 8 most important re-export sectors. We simulated a 10% depreciation of the CFA F and a 20% decrease in import tariffs. Our findings demonstrate a great sensitivity of government’s revenues to the activity of this informal sector. For one simulation, public savings dropped by almost 25%, but in both cases, the government’s income was strongly affected.
    Keywords: CGE model, informal trade, Benin, Nigeria, public finance
    JEL: F10 H61 C68
    Date: 2009–07–01
  3. By: Hielke Buddelmeyer (Institute of Applied Economic and Social Research, The University of Melbourne); Nicolas Hérault (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Guyonne Kalb (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Mark van Zijll de Jong (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: This paper extends the 'top-down' framework, introduced by Robilliard et al. (2001), to link a computable general equilibrium (CGE) model to a microsimulation model. The proposed approach allows the linking of a microsimulation model to a dynamic, and not simply a static, CGE model by enabling the microsimulation model to reproduce the predicted long-term changes in the base population. The approach relies on altering the sample weights in order to reproduce population projections and the changes in employment as estimated by the CGE model. A particular effort is made to discuss the limitations arising from the various assumptions made in both models as well as in the linking process. As an illustrative example, the approach is applied to assess the effects of climate-change mitigation policies in Australia from 2005 to 2030 at five-yearly intervals.
    Date: 2009–03
  4. By: Denis Boissin (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis)
    Abstract: Modern environmental issues imply that decision-makers take into account possibly conflicting information from distinct domains, such as science and economics. Boundary organizations, institutions that cross the gap between two different domains, are able to act beyond the boundaries while remaining accountable to each side. The goal is to simulate boundary organizations to assess their impact on the diffusion of experts' opinions. The hypothesis tested is whether the existence of a boundary organization eases the decision-making process by reducing the number of opinions expressed. The methodology relies on a multi-agent system based on a model of continuous opinion dynamics extended over two dimensions. Agents are described by credibility and conviction: the credibility represents how much other agents may be influenced by an agent, and the conviction represents the resistance of an agent to changing its position. Two kinds of agents are left free to interact, modifying their position through one-to-one exchanges. Agents called borgs are introduced: open to trans-disciplinary discussion, they are able to exchange on both dimensions. The results show that the range of expressed opinions is significantly reduced, even at low levels of experts involved in the boundary organization.
    Date: 2009
  5. By: Karen Turner (Department of Economics, University of Strathclyde); Nick Hanley (Department of Economics, University of Stirling)
    Abstract: The Environmental Kuznets Curve (EKC) hypothesis focuses on the argument that rising prosperity will eventually be accompanied by falling pollution levels as a result of one or more of three factors: (1) structural change in the economy; (2) demand for environmental quality increasing at a more-than-proportional rate; (3) technological progress. Here, we focus on the third of these. In previous work we have used single region/nation models of the Scottish and UK economies to simulate the impacts of increased labour and energy efficiency on the domestic economy’s position on the EKC, with a specific focus on CO2 emissions. There we find that, while the impacts of an increase in energy efficiency are difficult to predict, mainly due to the potential for ‘rebound’ effects, while increasing CO2 emissions, improved labour productivity is likely to move an economy along its EKC through more rapid GDP growth. However, recent developments in the EKC literature have raised the issue of whether this will still be the case if emissions are accounted for from a consumption rather than a production perspective (the ‘pollution leakage’ hypothesis) – i.e. taking account of indirect pollution generation embodied in trade flows rather than just domestic emissions generation. Here we extend our earlier single region analysis for Scotland by using an interregional CGE model of the UK economy to examine the likely impacts of an increase in Scottish labour productivity on the rest of the UK and on a national EKC through interregional labour migration and trade flows.
    Keywords: computable general equilibrium; technological progress; environmental kuznets curve; pollution leakage
    JEL: D58 F16 F18 O13
    Date: 2009–06
  6. By: Viviane Azevedo; Cesar Bouillon; Patricia Yanez-Pagans
    Abstract: Although Mexico’s Conditional Cash Transfer Program Oportunidades has increased overall school enrollment, many adolescents do not attend school, especially in urban areas. This paper simulates the effects of changes in program design using a simple parametric method based on a simultaneous probability model of school attendance and child labor. The paper also provides alternative non parametric simulation results by extending Todd and Wolpin’s (2006) method to incorporate changes in working hours when attending school. The results indicate that eliminating or reducing school subsidies for primary education and increasing transfer for older students is a cost-effective way to raise overall school enrollment in urban areas. Increasing school attendance of 16-year-olds to 80 percent or more, however, would require a quadrupling of scholarships. This suggests that complementary interventions are needed.
    Keywords: School attendance and work, Conditional cash transfers, Simulation, Oportunidades
    JEL: I20 J22
    Date: 2009–06

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