New Economics Papers
on Computational Economics
Issue of 2010‒08‒06
seventeen papers chosen by

  1. Estimation of a simple genetic algorithm applied to a laboratory experiment By Alfarano, Simone; Eva, Camacho; Josep, Domènech
  2. The pension projection package of the Destinie 2 model: users guide By D. BLANCHET; E. CRENNER
  3. Forecasting Nevada Gross Gaming Revenue and Taxable Sales Using Coincident and Leading Employment Indexes By Mehmet Balcilar; Rangan Gupta; Anandamayee Majumdar; Stephen M. Miller
  4. Approximations and asymptotics of upper hedging prices in multinomial models By Ryuichi Nakajima; Masayuki Kumon; Akimichi Takemura; Kei Takeuchi
  6. Scenarios for Climate Change Mitigation from the Energy Sector in Indonesia: The Role of Fiscal Instruments By Arief Anshory Yusuf; Ahmad Komarulzaman; Wawan Hermawan; Djoni Hartono; Kindy R. Sjahrir
  7. The impact of infrastructure spending in Sub-Saharan Africa : a CGE modeling approach By Perrault, Jean-François; Savard, Luc; Estache, Antonio
  8. Die Gewerbesteuer seit der Unternehmensteuerreform 2008: Steigt die Steuerbelastung und die Gefahr der Substanzbesteuerung? Eine empirische Analyse By Kerstin Schneider; Claudia Wesselbaum-Neugebauer
  9. The Dynamics of the Informal Economy By Roxana Gutierrez-Romero
  10. Modeling Biofuels Policies in General Equilibrium: Insights, Pitfalls and Opportunities By Golub, Alla; Hertel, Thomas; Taheripour, Farzad; Tyner, Wally
  12. Workers' Choice on Pension Schemes: an Assessment of the Italian TFR Reform Through Theory and Simulations By Lorenzo Corsini; Pier Mario Pacini; Luca Spataro
  13. The dynamics of consensus in group decision making: investigating the pairwise interactions between fuzzy preferences. By Mario Fedrizzi; Michele Fedrizzi; Ricardo Alberto Marques Pereira; Matteo Brunelli
  14. Limited memory can be beneficial for the evolution of cooperation By Friederike Mengel; Gergely Horváth; Jaromir Kovarik
  15. The new Destinie 2 microsimulation model: main characteristics and illustrative results By D. BLANCHET; S. BUFFETEAU; E. CRENNER; S. LE MINEZ
  16. Alternative models for moment inequalities By Ariel Pakes
  17. The OECD’s New Global Model By Karine Hervé; Nigel Pain; Pete Richardson; Franck Sédillot; Pierre-Olivier Beffy

  1. By: Alfarano, Simone; Eva, Camacho; Josep, Domènech
    Abstract: The aim of our contribution relies on studying the possibility of implementing a genetic algorithm in order to reproduce some characteristics of a simple laboratory experiment with human subjects. The novelty of our paper regards the estimation of the key-parameters of the algorithm, and the analysis of the characteristics of the estimator.
    Keywords: Estimation; genetic algoritms; experimenst
    JEL: C13 C63
    Date: 2010–04
  2. By: D. BLANCHET (Insee); E. CRENNER (Drees)
    Abstract: The Destinie model is a dynamic microsimulation model whose main purpose is the long run projection of pensions both at the macro and micro levels. This document presents how such simulations can be built with the new version of the model. They do not rely on a closed ready-made program where variants would be obtained by just changing values for a predetermined set of parameters. The new Destinie 2 model has been rather designed as a toolbox of modules, allowing the construction of ad hoc projection programs that can be tailored to users demands. We provide a comprehensive view of this toolbox. This document addresses the needs of both basic users and more advanced ones, including for applications that would eventually require the building of additional modules.
    Keywords: Microsimulation, pensions
    JEL: C63 H55
    Date: 2010
  3. By: Mehmet Balcilar (Department of Economics, Eastern Mediterranean University, Famagusta, North Cyprus,via Mersin 10, Turkey); Rangan Gupta (Department of Economics, University of Pretoria); Anandamayee Majumdar (School of Mathematical & Statistical Sciences, Arizona State University); Stephen M. Miller (College of Business, University of Las Vegas, Nevada)
    Abstract: This paper provides out-of-sample forecasts of Nevada gross gaming revenue and taxable sales using a battery of linear and non-linear forecasting models and univariate and multivariate techniques. The linear models include vector autoregressive and vector error-correction models with and without Bayesian priors. The non-linear models include non-parametric and semiparametric models, smooth transition autoregressive models and artificial neural network autoregressive models. In addition to gross gaming revenue and taxable sales, we employ recently constructed coincident and leading employment indexes for Nevada’s economy. We conclude that non-linear models generally outperform linear models in forecasting future movements in gross gaming revenue and taxable sales.
    Keywords: Forecasting, Linear and non-linear models, Nevada gross gaming revenue, Nevada taxable sales
    JEL: C32 R31
    Date: 2010–07
  4. By: Ryuichi Nakajima; Masayuki Kumon; Akimichi Takemura; Kei Takeuchi
    Abstract: We give an exposition and numerical studies of upper hedging prices in multinomial models from the viewpoint of linear programming and the game-theoretic probability of Shafer and Vovk. We also show that, as the number of rounds goes to infinity, the upper hedging price of a European option converges to the solution of the Black-Scholes-Barenblatt equation.
    Date: 2010–07
  5. By: Cororaton, Caesar B.; Timilsina, Govinda; Mevel, Simon
    Abstract: This paper analyzes the impact of expansion in biofuels on the global economy, income distribution and poverty. It utilizes simulation results of two World Bank models: a global computable general equilibrium (CGE) model integrated with biofuels, land-use, and climate change modules, and a global income distribution model that utilizes household survey data of 116 countries. The first model simulates the effects over time of large scale expansion of biofuels on resource allocation, output prices, commodity prices, factor prices, and household income of the different countries and regions in the world. The second model uses these results recursively to calculate the impact on global income distribution and poverty. The results from the CGE model indicate that large scale expansion of biofuels lead to higher world prices of sugar, corn, oilseeds, wheat, and other grains, which lead to higher food prices. The increase in food inflation is higher in developing countries than in developed countries. The expansion of biofuels results in higher wages of unskilled rural labor relative to wages of the other labor types which are skilled urban, skilled rural, and unskilled urban, especially in developing countries. These positive wage effects on unskilled rural labor trigger movement of unskilled urban labor towards rural and agriculture. This is because production of feedstock in developing countries is relatively intensive in the use of unskilled rural labor. The effects of large scale expansion of biofuels on poverty vary across regions. But overall there is a slight increase in global poverty. The increase largely comes from South Asia (particularly India) and Sub-Saharan Africa. Significant number of countries in Sub-Saharan Africa show higher poverty with large scale expansion of biofuels. However, poverty declines in East Asia and Latin America regions. Overall, there is a slight increase in the GINI coefficient. There is a slight increase in the GINI coefficient in Sub-Saharan Africa and East Asia. There is a small reduction in the GINI coefficient in the rest of the regions.
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy, Food Security and Poverty, International Relations/Trade, Land Economics/Use, Resource /Energy Economics and Policy,
    Date: 2010
  6. By: Arief Anshory Yusuf (Department of Economics, Padjadjaran University); Ahmad Komarulzaman (Department of Economics, Padjadjaran University); Wawan Hermawan (Department of Economics, Padjadjaran University); Djoni Hartono (Graduate Program of Economics, University of Indonesia); Kindy R. Sjahrir (Fiscal Policy Office, Ministry of Finance. Republic of Indonesia)
    Abstract: As mandated by the recent Copenhagen Accord, Indonesia submitted a nationally appropriate mitigation actions plan to reduce greenhouse gasses emission by 26% by 2020. However, for now, specific strategies especially appropriate instruments to achieve those targets are yet under early planning stage. This study is an attempt to contribute to the policy design on how Indonesia can achieve that target in particular for the energy sector by looking directly at specific instruments available and under the discretion of Indonesian government particularly the Ministry of Finance. For this purpose, we constructed AGEFIS-E model, a computable general equilibrium (CGE) model with a focus on energy sector and fiscal instruments. As the departure from the previous literature on CGE modeling in Indonesia, this model incorporates explicitly the renewable energy such as geothermal and hydropower. It was used to exercise various scenarios of finding an effective mix of instruments to reduce emissions from the energy sector. We find that a scenario of engineering the energy relative prices through pricing-instruments is an effective way to achieve a given target of reducing emissions from the energy sectors. More specifically, we conclude that removing energy subsidy (fuel and electricity) can contribute to significant reduction in carbon emissions. Adding a carbon tax to the policy mix will complement to find the best scenario to achieve a certain target of emissions reduction. A target of 14% reduction of emissions from the energy sector, for example, can be achieved by removing energy subsidy complemented by a carbon tax of only around US$3/ton CO2. Half of the reduction is attributed to the removing energy subsidy alone, suggesting evidence that the emissions reduction potential of energy pricing reform has been overlooked in the policy agenda.
    Keywords: climate change, computable general equilibrium model, fiscal instruments, energy, Indonesia
    JEL: D30 D58 Q40 Q48 Q54 Q56 Q58
    Date: 2010–07
  7. By: Perrault, Jean-François; Savard, Luc; Estache, Antonio
    Abstract: The authors constructed a standard computable general equilibrium (CGE) model to explore the economic impact of increased spending on infrastructure in six African countries: Benin, Cameroon, Mali, Senegal, Tanzania, and Uganda. The basic elements of the model are drawn from EXTER, adjusted to accommodate infrastructure externalities. Seven sectors were considered: food crop agriculture, export agriculture, mining and oil, manufacturing, construction, private services, and public services. Four sets of simulations were conducted: baseline nonproductive investments, roads, electricity, and telecoms. For each set of simulations, five funding schemes were considered: reduced public expenditure; increased value-added taxes; increased import duties; funding from foreign aid; and increased income taxes. In general, the funding schemes had similar qualitative and quantitative effects on macro variables. For road and electricity investment, there were relatively large quantitative differences and some qualitative differences among funding schemes at the macro level. Sectoral analysis revealed further disparities among countries and investment types. The same type of investment with the same funding sources had varying effects depending on the economic structure of the sector in question. The authors find that few sectors are purely tradable or non-tradable, having instead variable degrees of openness to trade. If the current account needs to be balanced, funding investment through foreign aid produces the strongest sectoral effects because strong price and nominal exchange rate adjustments are needed to clear the current account balance. In addition, the capital/labor ratio of each sector plays an important role in determining its winners and losers.
    Keywords: Economic Theory&Research,Debt Markets,Emerging Markets,Investment and Investment Climate,Public Sector Expenditure Policy
    Date: 2010–07–01
  8. By: Kerstin Schneider (Schumpeter School of Business and Economics, University of Wuppertal, Germany); Claudia Wesselbaum-Neugebauer (Schumpeter School of Business and Economics, University of Wuppertal, Germany)
    Abstract: The German corporate tax reform of 2008 has brought significant changes for determining the tax base of the trade tax. The paper simulates the new rules and shows how the tax burden is affected. Simulation is based on representative cost data of the manufacturing sector in 2006. The results show that the goals of the corporate tax reform are missed. The total tax burden for incorporated enterprises exceeds 30 % because of the new add-back regulations and is now even slightly progressive in employment. Taxation in case of losses has become more prevalent, regardless of the legal form. In particular in the scenario of an economic crisis, the new regulations are problematic for the firms and trade tax revenue neither increases, nor is it a less volatile source of tax revenue for the communities.
    Keywords: taxation, microsimulation, tax reform, trade trax
    JEL: H25 H71 K34 C15
    Date: 2010–07
  9. By: Roxana Gutierrez-Romero
    Abstract: This paper analyses the factors that give rise to the existence of the informal economy and how it evolves over time. Using an occupational-choice model the paper shows that at early stages of development, informal and formal markets coexists, but in the long-run the size of the informal economy can decline depending on the initial distribution of wealth. The model shows that the higher the initial wealth inequality the larger the size of the informal economy and the higher the wealth inequality will be in the long run. The paper calibrates the model using numerical simulations.
    Keywords: informal economy, occupational choice and inequality
    JEL: D31 K4
    Date: 2010
  10. By: Golub, Alla; Hertel, Thomas; Taheripour, Farzad; Tyner, Wally
    Abstract: Over the past decade, biofuels production in the EU and US has boomed - much of this due to government mandates and subsidies. The US has now surpassed Brazil as the world's leading producer of ethanol. The economic and environmental impact of these biofuel programs has become an important question of public policy. Due to the complex intersectoral linkages between biofuels and crops, livestock as well as energy activities, CGE modeling has become an important tool for their analysis. This chapter reviews recent developments in this area of economic analysis, and suggests directions for future research.
    Date: 2010
  11. By: Jiang, Yong; Koo, Won
    Abstract: The purpose of this study is to examine the possible local impacts of cap-and-trade climate policy on agricultural producers in the Northern Plains. This study explicitly considers farmer behavior with respect to agricultural opportunity in carbon offset provision and ability of adaptation to mitigate the production cost impact under a cap-and-trade climate policy. Based on empirically estimated farmer behavior models, a policy simulation with agricultural census data identifies farmer acreage enrollment in carbon offset provision, carbon offset supplies and revenues, the production cost impacts of carbon prices, and impacts on net farm income and their distributions among heterogeneous farmers. Our analysis find that: 1) farmer ex ante preferences in general are biased against participating in carbon credit programs although farmer involvement increases with carbon prices; 2) with the fertilizer industry exempted from cap-and-trade regulation, the production cost impacts would be small, and more than half of the farms or farmland would probably gain for a carbon price higher than $10 per metric ton of carbon; and 3) the production cost impacts with a capped fertilizer industry would be 2 times higher, and more than half of the farms or farmland would lose unless the carbon price could reach beyond $55 per metric ton of carbon. This study sheds some light on agricultural potential to adapt to economy-wide climate change mitigation while providing a bottom-up economic assessment of the costs and benefits of a cap-and-trade climate policy to agricultural producers in the short run.
    Keywords: greenhouse gas, cap-and-trade, climate change, agricultural impact, economics, carbon offsets, Agricultural and Food Policy, Environmental Economics and Policy, Land Economics/Use, Resource /Energy Economics and Policy,
    Date: 2010
  12. By: Lorenzo Corsini; Pier Mario Pacini; Luca Spataro
    Abstract: In this paper we aim at providing a theoretical framework to model workers’ choice problem of switching between different pension schemes. This choice problem is common in several countries that have reformed their social security system in the last decades. Although with some specific features, such process is currently affecting private sector employees in Italy, since the reform of the TFR mechanism in 2007. This reform basically allows workers to choose between a scheme directly managed by the firms and an external defined contribution scheme. In their decision workers not only have to weight out the different pros and cons that different schemes offer but they also have to consider the effect that their choice exerts on the financial structure of the firm they work in. Once we have formalized this decision problem, we carry out some simulations in order to replicate the Italian data and to shed some light on the outcomes of the Italian reform.
    Keywords: pension funds, saving decisions, search models
    JEL: J64 J32 G23
    Date: 2010–05–01
  13. By: Mario Fedrizzi (DISA, Faculty of Economics, Trento University); Michele Fedrizzi; Ricardo Alberto Marques Pereira (DISA, Faculty of Economics, Trento University); Matteo Brunelli
    Abstract: In this paper we present an overview of the soft consensus model in group decision making and we investigate the dynamical patterns generated by the fundamental pairwise preference interactions on which the model is based. The dynamical mechanism of the soft consensus model is driven by the minimization of a cost function combining a collective measure of dissensus with an individual mechanism of opinion changing aversion. The dissensus measure plays a key role in the model and induces a network of pairwise interactions between the individual preferences. The structure of fuzzy relations is present at both the individual and the collective levels of description of the soft consensus model: pairwise preference intensities between alternatives at the individual level, and pairwise interaction coefficients between decision makers at the collective level. The collective measure of dissensus is based on non linear scaling functions of the linguistic quantifier type and expresses the degree to which most of the decision makers disagree with respect to their preferences regarding the most relevant alternatives. The graded notion of consensus underlying the dissensus measure is central to the dynamical unfolding of the model. The original formulation of the soft consensus model in terms of standard numerical preferences has been recently extended in order to allow decision makers to express their preferences by means of triangular fuzzy numbers. An appropriate notion of distance between triangular fuzzy numbers has been chosen for the construction of the collective dissensus measure. In the extended formulation of the soft consensus model the extra degrees of freedom associated with the triangular fuzzy preferences, combined with non linear nature of the pairwise preference interactions, generate various interesting and suggestive dynamical patterns. In the present paper we investigate these dynamical patterns which are illustrated by means of a number of computer simulations.
    Date: 2010–07
  14. By: Friederike Mengel (Universidad de Alicante); Gergely Horváth (Dpto. Fundamentos del Análisis Económico); Jaromir Kovarik (Universidad de Alicante)
    Abstract: We study a dynamic process where agents in a network interact in a Prisoner’s Dilemma. The network not only mediates interactions, but also information: agents learn from their own experience and that of their neighbors in the network about the past behavior of others. Each agent can only memorize the last h periods. Evolution selects among three preference types: altruists, defectors and conditional cooperators. We show - relying on simulation techniques - that the probability of reaching a cooperative state does not relate monotonically to the size of memory h. In fact it turns out to be optimal from a population viewpoint that there is a finite bound on agents’ memory capacities. We also show that it is the interplay of local interactions, direct and indirect reputation and memory constraints that is crucial for the emergence of cooperation. Taken by itself, none of these mechanisms is sufficient to yield cooperation.
    Keywords: evolution, reputation, bounded memory, cooperation.
    JEL: C70 C72 C73
    Date: 2010–07
  15. By: D. BLANCHET (Insee); S. BUFFETEAU (Drees); E. CRENNER (Drees); S. LE MINEZ (Dares)
    Abstract: The Destinie model is a dynamic microsimulation model that has been developed and used at the French national statistical institute (INSEE) since the mid-1990s and whose main application is the analysis of pension policies. The paper presents the new version of the model that is progressively becoming operational. The main goals of this new version have been to improve the robustness and the flexibility of the instrument. This new model has two separate components: (a) a generator of demographic and employment biographies, whose results are stored in intermediate output files and (b) a library of subroutines allowing an easy programming of ad hoc pension projections based on data from these intermediary files. We explain the advantages of this new structure and we provide some preliminary results showing the impacts of the 1993 and 2003 reforms, or of the long-term impact, on pensions, of various post-crisis growth scenarios.
    Keywords: Pensions, microsimulation, retirement behavior
    JEL: H55 J26
    Date: 2010
  16. By: Ariel Pakes (Institute for Fiscal Studies and Harvard University)
    Abstract: <p>Behavioral choice models generate inequalities which, when combined with additional assumptions, can be used as a basis for estimation. This paper considers two sets of such assumptions and uses them in two empirical examples. The second example examines the structure of payments resulting from the upstream interactions in a vertical market. We then mimic the empirical setting for this example in a numerical analysis which computes actual equilibria, examines how their characteristics vary with the market setting, and compares them to the empirical results. The final section uses the numerical results in a Monte Carlo analysis of the robustness of the two approaches to estimation to their underlying assumptions.</p>
    Date: 2010–07
  17. By: Karine Hervé; Nigel Pain; Pete Richardson; Franck Sédillot; Pierre-Olivier Beffy
    Abstract: This paper provides a summary of the OECD’s new global macroeconometric model, including an overview of model structure and a selection of simulations illustrating its main properties. Compared with its predecessors, the new model is more compact and regionally aggregated, but gives more weight to the focus of policy interests in global trade and financial linkages. The country model structures typically combine short-term Keynesian-type dynamics with a consistent long-run neo-classical supply-side. While retaining a conventional treatment of international trade and payments linkages, the model has a greater degree of stock-flow consistency, with explicit modelling of domestic and international assets, liabilities and associated income streams. Account is also taken of the influence of financial and housing market developments on asset valuation and domestic expenditures via house and equity prices, interest rates and exchange rates. As a result, the model gives more prominence to wealth and wealth effects in determining longer-term outcomes and the role of asset prices in the transmission of international shocks both to goods and financial markets.<P>Le nouveau modèle global de l’OCDE<BR>Ce document de travail présente un résumé du nouveau modèle macro-économétrique de l’OCDE, incluant une vue d’ensemble de la structure du modèle et une sélection de simulations qui illustrent ses principales propriétés. Comparé aux modèles antérieurs, le nouveau modèle est plus compact et agrégé par région, mais donne plus de poids aux politiques économiques portant sur les interactions entre le commerce mondial et les marchés financiers. Les structures du modèle par pays combinent des dynamiques de court terme de type Keynésien avec un côté de l’offre à long terme néo-classique consistant. Alors qu’il conserve un traitement conventionnel des interactions enter le commerce international et les secteurs financiers, le modèle a un meilleur degré de consistance des stocks et des flux, avec une modélisation explicite des actifs domestiques et internationaux et des flux des actions et des revenus qui en découlent. On tient compte aussi de l’influence du développement des marchés financier et immobilier sur les valorisations d’actifs et les dépenses domestiques à travers les prix des maisons et des titres, des taux d’intérêt et des taux de change. En conséquence, le modèle donne plus d’importance à la richesse et aux effets de richesse dans les résultats à long terme des simulations, ainsi qu’au rôle du prix des actifs dans la transmission des chocs internationaux entre les biens et les marchés financiers.
    Keywords: simulation, macroeconomic, Global, econometric modelling, simulation, macroéconomique, global, modèle économétrique
    JEL: E17 F01 F47
    Date: 2010–05–05

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