New Economics Papers
on Computational Economics
Issue of 2010‒07‒10
nine papers chosen by

  1. Cloud Computing Value Chains Understanding Businesses and Value Creation in the Cloud By Ashraf Bany Mohammed; Jorn Altmann; Junseok Hwang
  2. The Benefits of Regional Infrastructure Investment in Asia: A Quantitative Exploration By Zhai, Fan
  3. Selective Reductions in Labor Taxation Labour Market Adjustments and Macroeconomic Performance By Anna BATYRA; Henri SNEESSENS
  4. The Macroeconomics of Health Savings Accounts By Juergen Jung; Chung Tran
  5. Pricing Options under Heston’s Stochastic Volatility Model via Accelerated Explicit Finite Differencing Methods By Conall O'Sullivan; Stephen O'Sullivan
  6. Optimally routing and scheduling tow trains for JIT-supply of mixed-model assembly lines By Simon Emde; Nils Boysen
  7. A decade of application of the Choquet and Sugeno integrals in multi-criteria decision aid By Michel Grabisch; Christophe Labreuche
  8. Risky Tax Shields and Risky Debt: A Monte Carlo Approach By Ignacio Velez Pareja
  9. Econophysics on Real Economy -The First Decade of the Kyoto Econophysics Group- By Hideaki Aoyama; Yoshi Fujiwara; Yuichi Ikeda; Hiroshi Iyetomi; Wataru Souma

  1. By: Ashraf Bany Mohammed; Jorn Altmann; Junseok Hwang (Technology Management, Economics and Policy Program(TEMEP), Seoul National University)
    Abstract: Based on the promising developments in Cloud Computing technologies in recent years, commercial computing resource services (e.g. Amazon EC2) or software-as-a-service offerings (e.g. came into existence. However, the relatively weak business exploitation, participation, and adoption of other Cloud Computing services remain the main challenges. The vague value structures seem to be hindering business adoption and the creation of sustainable business models around its technology. Using an extensive analyze of existing Cloud business models, Cloud services, stakeholder relations, market configurations and value structures, this Chapter develops a reference model for value chains in the Cloud. Although this model is theoretically based on porter's value chain theory, the proposed Cloud value chain model is upgraded to fit the diversity of business service scenarios in the Cloud computing markets. Using this model, different service scenarios are explained. Our findings suggest new services, business opportunities, and policy practices for realizing more adoption and value creation paths in the Cloud.
    Keywords: Cloud computing, value chain, business models, Grid computing, service oriented computing, value networks, software-as-a-service, Grid economics, services, service sciences.
    JEL: D02 D21 D23 D46 D85 L14 L23 L86 M21
    Date: 2010–06
  2. By: Zhai, Fan (Asian Development Bank Institute)
    Abstract: Capitalizing on recent estimates of infrastructure financing requirements in Asia, this paper frames a scenario for infrastructure development in the region and estimates the external effects of infrastructure investment. It also assesses quantitatively the economy-wide welfare effects of developing regional infrastructure in Asia, using a global computable general equilibrium model. The results show that developing Asian economies would gain significantly from the expansion of regional infrastructure in transport and communication. With annual investment of around US$800 billion in transport, communication, and energy infrastructure during 2010-2020, developing Asia is likely to reap welfare gains of US$1,616.3 billion (in 2008 prices) in 2020, or 10% of projected aggregate gross domestic product.
    Keywords: asian infrastructure financing; asian regional infrastructure; asian infrastructure development
    JEL: C68 F15
    Date: 2010–06–30
  3. By: Anna BATYRA (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Henri SNEESSENS (CREA, UniversitŽ du Luxembourg, IRES, UniversitŽ catholique de Louvain, and IZA, Bonn)
    Abstract: We use a calibrated general equilibrium model with heterogeneous labor and search to evaluate the quantitative effects of various labor tax cut scenarios. The focus is on skill heterogeneity combined with downward wage rigidities at the low end of the skill ladder. Workers can take jobs for which they are overeducated. We compare targeted and non-targeted tax cuts, both with or without over-education effects. Introducing over-education changes substantially the employment, productivity and welfare effects of a tax cut, although tax cuts targeted on the least skilled workers always have larger effects.
    Keywords: Minimum Wage, Job Creation, Job Destruction, Job Competition, Search Unemployment, Taxation, Computable General Equilibrium Models
    JEL: C68 E24 J64
    Date: 2010–01–31
  4. By: Juergen Jung (Department of Economics, Towson University); Chung Tran (Department of Economics, University of New South Wales)
    Abstract: We analyze whether the introduction of Health Savings Accounts (HSAs), which is a health insurance reform coupled with a capital tax reform, can reduce health care expenditures in the United States and increase the fraction of the population with health insurance. Unlike previous studies on HSAs, our analysis relies on a general equilibrium framework and therefore fully accounts for feedback effects from general equilibrium price changes. Our results from numerical simulations indicate that the introduction of HSAs increases the percentage of the working age population with health insurance in the long run but fails to control spending on health care. The outcome of a HSAs reform depends critically on the annual contribution limits to HSAs and the interplay of general equilibrium effects. Finally, the long-run tax revenue loss due to the introduction of HSAs is large and can amount to up to 5 percent of GDP.
    Keywords: Health saving accounts, health care reform, privatization of health care systems, health insurance, stochastic dynamic general equilibrium model with health.
    JEL: H51 I18 I38
    Date: 2010–06
  5. By: Conall O'Sullivan (University College Dublin); Stephen O'Sullivan (Dublin Institute of Technology)
    Abstract: We present an acceleration technique, effective for explicit finite difference schemes describing diffusive processes with nearly symmetric operators, called Super-Time-Stepping (STS). The technique is applied to the two-factor problem of option pricing under stochastic volatility. It is shown to significantly reduce the severity of the stability constraint known as the Courant-Friedrichs-Lewy condition whilst retaining the simplicity of the chosen underlying explicit method. For European and American put options under Heston’s stochastic volatility model we demonstrate degrees of acceleration over standard explicit methods sufficient to achieve comparable, or superior, efficiencies to a benchmark implicit scheme. We conclude that STS is a powerful tool for the numerical pricing of options and propose them as the method-of-choice for exotic financial instruments in two and multi-factor models.
    Date: 2010–06–29
  6. By: Simon Emde (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Nils Boysen (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: In recent years, more and more automobile producers adopted the supermarket-concept to enable a flexible and reliable Just-in-Time (JIT) part supply of their mixed-model assembly lines. Within this concept, a supermarket is a decentralized in-house logistics area where parts are intermediately stored and then loaded on small tow trains. These tow trains travel across the shop floor on specific routes to make frequent small-lot deliveries which are needed by the stations of the line. To enable a reliable part supply in line with the JIT-principle, the interdependent problems of routing, that is, partitioning stations to be supplied among tow trains, and scheduling, i.e., deciding on the start times of each tow train's tours through its assigned stations, need to be solved. This paper introduces an exact solution procedure which solves both problems simultaneously in polynomial runtime. Additionally, management implications regarding the trade-off between number and capacity of tow trains and in-process inventory near the line are nvestigated within a comprehensive computational study.
    Keywords: Mixed-model assembly lines, Just-in-Time, Material supply, Tow Trains
    Date: 2010–06–30
  7. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Christophe Labreuche (UMP CNRS/THALES - Unité mixte de physique CNRS/Thalès - CNRS : UMR137 - THALES)
    Abstract: The main advances regarding the use of the Choquet and Sugeno integrals in multi-criteria decision aid over the last decade are reviewed. They concern mainly a bipolar extension of both the Choquet integral and the Sugeno integral, interesting particular submodels, new learning techniques, a better interpretation of the models and a better use of the Choquet integral in multi-criteria decision aid. Parallel to these theoretical works, the Choquet integral has been applied to many new fields, and several softwares and libraries dedicated to this model have been developed.
    Keywords: Choquet integral, Sugeno integral, capacity, bipolarity, preferences
    Date: 2010–03
  8. By: Ignacio Velez Pareja
    Abstract: I present a set of conditions for defining risky debt associated to cash flow and not to accounting earnings. I explain why realization of tax shields for finite cash flows in any period of time t are correlated to Earnings before Interest and Taxes and are not correlated to interest expenses at time t. Using Monte Carlo Simulation I explore the behavior of the four basic cash flows, Earnings before Interest and Taxes plus Other income OI, and interest charges, with eight scenarios applied to a financial planning model. I conclude that the risk of tax shields is Ku, the unlevered cost of equity.
    Date: 2010–06–28
  9. By: Hideaki Aoyama; Yoshi Fujiwara; Yuichi Ikeda; Hiroshi Iyetomi; Wataru Souma
    Abstract: Research activities of Kyoto Econophysics Group is reviewed. Strong emphasis has been placed on real economy. While the initial stage of research was a first high-definition data analysis on personal income, it soon progressed to firm dynamics, growth rate distribution and establishment of Pareto's law and Gibrat's law. It then led to analysis and simulation of firm dynamics on economic network. Currently it covers a wide rage of dynamics of firms and financial institutions on complex network, using Japanese large-scale network data, some of which are not available in other countries. Activities of this group for publicising and promoting understanding of econophysics is also reviewed.
    Date: 2010–06

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