nep-cmp New Economics Papers
on Computational Economics
Issue of 2009‒10‒10
six papers chosen by
Stan Miles
Thompson Rivers University

  1. Tipping and Residential Segregation: A Unified Schelling Model By Zhang, Junfu
  2. A Microsimulation Approach to an Optimal Swedish Income Tax By Ericson, Peter; Flood, Lennart
  3. Inventive Process as a Recombinant Search over Complex Landscape: Evidence from the Disk Drive Industry By Martin Ganco
  4. Counterfactual analysis using a regional dynamic general equilibrium model with historical calibration By Federico Perali; Stefania Lovo
  5. Optimal split of orders across liquidity pools: a stochastic algorithm approach By Sophie Laruelle; Charles-Albert Lehalle; Gilles Pag\`es
  6. How Good Are Ex Ante Program Evaluation Techniques? The Case of School Enrollment in PROGRESA By Fabian Bornhorst

  1. By: Zhang, Junfu (Clark University)
    Abstract: This paper presents a Schelling-type checkerboard model of residential segregation formulated as a spatial game. It shows that although every agent prefers to live in a mixed-race neighborhood, complete segregation is observed almost all of the time. A concept of tipping is rigorously defined, which is crucial for understanding the dynamics of segregation. Complete segregation emerges and persists in the checkerboard model precisely because tipping is less likely to occur to such residential patterns. Agent-based simulations are used to illustrate how an integrated residential area is tipped into complete segregation and why this process is irreversible. This model incorporates insights from Schelling's two classical models of segregation (the checkerboard model and the neighborhood tipping model) and puts them on a rigorous footing. It helps us better understand the persistence of residential segregation in urban America.
    Keywords: residential segregation, tipping, checkerboard model
    JEL: C72 C73 D62 R13
    Date: 2009–09
  2. By: Ericson, Peter (Empirica); Flood, Lennart (Göteborg University)
    Abstract: This paper follows the theory of optimal taxation and the goal is to identify a tax/benefit design that maximizes social welfare. A two stage process is proposed where the individuals preferred choice of leisure and consumption is solved in the first stage, and the second stage identifies the tax/benefit system that maximize the social welfare function. Our study deviates from the mainstream literature as the first stage is based on a static micro simulation model with behavioral responses. The behavioral responses take two different forms and use two different types of models; first binary models that describe mobility in/out from non-work states such as old age pension, disability, unemployment, long term sickness, and second models that describe change in working hours and welfare participation. Compared to the current Swedish income tax, our results suggest that increased basic deduction and in-work tax credit in combination with a reduction of the progressive national taxes would increase welfare. We also find strong support for increased housing allowances. The reforms are financed by a tax based on the same tax base as the proportional municipal income tax.
    Keywords: micro simulation, tax-benefit system, in-work tax credit reform, optimal taxation
    JEL: C8 D31 H24
    Date: 2009–08
  3. By: Martin Ganco
    Keywords: Invention, Recombinant search, Complexity, NK Model, Simulation, Interdependence
    JEL: A
    Date: 2009
  4. By: Federico Perali (Department of Economics (University of Verona)); Stefania Lovo (Department of Economics (University of Verona))
    Abstract: This paper develops a regional dynamic general equilibrium model calibrated using two regional SAMs for the Italian region Valle D’Aosta for the years 1963 and 2002. A historical calibration procedure is performed over the 40 years period and a validation exercise ensures that the modelled tendencies closely approximate the actual observed growth patterns of the main regional macroeconomic variables. The dynamic general equilibrium model provides an original and powerful tool for historical counterfactual analysis not available using standard dynamic general equilibrium models. The model is used to compare the growth path followed by the region during the period of interest with different scenarios intended to rank the social desirability of alternative behaviours of the regional administration.
    Keywords: historical calibration, historical validation, regional dynamic general equilibrium model, historical counterfactual analysis
    JEL: C68 R13
    Date: 2009–09
  5. By: Sophie Laruelle (PMA); Charles-Albert Lehalle (PMA); Gilles Pag\`es (PMA)
    Abstract: Evolutions of the trading landscape lead to the capability to exchange the same financial instrument on different venues. Because liquidity issues the trading firms split large orders across trading destinations to optimize their execution. To solve this problem we devised two stochastic recursive learning procedures which adjust the proportions of the order to be sent to the different venues, one based on an optimization principle, the other on reinforcement ideas. We investigate both procedures from a theoretical point of view. In particular, we prove convergence results for the optimization algorithm when the innovations are supposed to be Markov stationary and ergodic (and speed with some mixing properties or when they are i.i.d.). Finally, we compare the behaviours of both algorithms on several simulations results (with simulated data and real data). We evaluate their performances with respect to an "oracle" strategy of an "insider" who could know \textit{a priori} the executed quantities by every venues.
    Date: 2009–10
  6. By: Fabian Bornhorst
    Abstract: This paper evaluates a microsimulation technique by comparing the simulated outcome of a program with its actual effect. The ex ante evaluation is carried out for a conditional cash transfer program, where poor households were given money if the children attended school. A model of occupational choice is used to simulate the expected impact of the program. The results suggest that the transfer would indeed increase school attendance and do more so among girls than boys. While the simulated effect tends to be larger than the actual effect, the latter lies within bootstrapped confidence intervals of the simulation.
    Keywords: Economic models , Education , Human capital , Income , Labor markets , Labor productivity , Labor supply , Mexico , Payment systems , Poverty reduction , Private sector , Social policy ,
    Date: 2009–09–02

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