New Economics Papers
on Computational Economics
Issue of 2010‒08‒21
ten papers chosen by

  1. Scrap Value Functions in Dynamic Decision Problems By Ikefuji, M.; Laeven, R.J.A.; Magnus, J.R.; Muris, C.H.M.
  2. Two Risk-aware Resource Brokering Strategies in Grid Computing:Broker-driven vs. User-driven Methods By Junseok Hwang; Jihyoun Park; Jorn Altmann
  3. Expected Improvement in Efficient Global Optimization Through Bootstrapped Kriging By Kleijnen, Jack P.C.; Beers, W.C.M. van; Nieuwenhuyse, I. van
  4. An Aggregated Optimization Model for Multi-Head SMD Placements By Ashayeri, J.; Ma, N.; Sotirov, R.
  5. How Does A Decrease In Oil Production Affect The World Economy? By Naohiko Yahaba
  6. Retributing forest carbon vs. stimulating fuelwood demand insights from the French forest sector model By Franck Lecocq; Sylvain Caurla; Philippe Delacote; Ahmed Barkaoui; Alexandre Sauquet
  7. Optimization of land and resource use at farm-aggregated level in the Aral Sea Basin of Uzbekistan with the integrated model FLEOM â model description and first application By Sommer, Rolf; Djanibekov, Nodir; Salaev, Omonbek
  8. "Investing in Care: A Strategy for Effective and Equitable Job Creation" By Rania Antonopoulos; Kijong Kim; Tom Masterson; Ajit Zacharias
  9. Optimal risk in marketing resource allocation. By Balbás, Alejandro; Esteban Bravo, Mercedes; Vidal-Sanz, Jose M.
  10. Macroeconomic Stability or Cycles? The Role of the Wage-price Spiral By Kolsrud, Dag; Nymoen, Ragnar

  1. By: Ikefuji, M.; Laeven, R.J.A.; Magnus, J.R.; Muris, C.H.M. (Tilburg University, Center for Economic Research)
    Abstract: We introduce an accurate, easily implementable, and fast algorithm to compute optimal decisions in discrete-time long-horizon welfaremaximizing problems. The algorithm is useful when interest is only in the decisions up to period T, where T is small. It relies on a flexible parametrization of the relationship between state variables and optimal total time-discounted welfare through scrap value functions. We demonstrate that this relationship depends on the boundedness, half-boundedness, or unboundedness of the utility function, and on whether a state variable increases or decreases welfare. We propose functional forms for this relationship for large classes of utility functions and explain how to identify the parameters.
    Keywords: Scrap value function;Dynamic optimization;Computation;Short horizon.
    JEL: C61 C63
    Date: 2010
  2. By: Junseok Hwang; Jihyoun Park; Jorn Altmann (Technology Management, Economics, and Policy Program (TEMEP), Seoul National University)
    Abstract: Grid computing evolves toward an open computing environment, which is characterized by highly diversified resource providers and systems. As the control of each computing resource becomes difficult, the security of users¡¯ job is often threatened by various risks occurred at individual resources in the network. This paper proposes two risk-aware resource brokering strategies: self-insurance and risk-performance preference specification. The former is a broker-driven method and the latter a user-driven method. Two mechanisms are analyzed through simulations. The simulation results show that both methods are effective for increasing the market size and reducing risks, but the user-driven technique is more cost-efficient.
    Keywords: Grid Computing, Risk Management, Self-Insurance, Risk-Performance Preference Specification
    JEL: C02 C15 C61 C63 D83 L11 L15 L86 L99 M21
    Date: 2010–03
  3. By: Kleijnen, Jack P.C.; Beers, W.C.M. van; Nieuwenhuyse, I. van (Tilburg University, Center for Economic Research)
    Abstract: This paper uses a sequentialized experimental design to select simulation input com- binations for global optimization, based on Kriging (also called Gaussian process or spatial correlation modeling); this Kriging is used to analyze the input/output data of the simulation model (computer code). This paper adapts the classic "ex- pected improvement" (EI) in "efficient global optimization" (EGO) through the introduction of an unbiased estimator of the Kriging predictor variance; this estima- tor uses parametric bootstrapping. Classic EI and bootstrapped EI are compared through four popular test functions, including the six-hump camel-back and two Hartmann functions. These empirical results demonstrate that in some applications bootstrapped EI finds the global optimum faster than classic EI does; in general, however, the classic EI may be considered to be a robust global optimizer.
    Keywords: Simulation;Optimization;Kriging;Bootstrap
    JEL: C0 C1 C9
    Date: 2010
  4. By: Ashayeri, J.; Ma, N.; Sotirov, R. (Tilburg University, Center for Economic Research)
    Abstract: In this article we propose an aggregate optimization approach by formulating the multi-head SMD placement optimization problem into a mixed integer program (MIP) with the variables based on batches of components. This MIP is tractable and effective in balancing workload among placement heads, minimizing the number of nozzle exchanges, and improving handling class. The handling class which specifies the traveling speed of the robot arm, to the best of our knowledge, has been for the first time incorporated in an optimization model. While the MIP produces an optimal planning for batches of components, a new sequencing heuristics is developed in order to determine the final sequence of component placements based on the outputs of the MIP. This two-stage approach guarantees a good feasible solution to the multi-head SMD placement optimization problem. The computational performance is examined using real industrial data.
    Keywords: Multi-head surface mounting device;Component placement;Variable placement speed
    JEL: C6
    Date: 2010
  5. By: Naohiko Yahaba
    Abstract: The world's oil consumption has been increasing for more than a century with a few exceptions. However, there would be a possibility that the recent increase in oil consumption in developing countries such as China and India tighten the long term oil market. Since the exact amount of oil reserves is unknown, it is difficult to predict when the ultimate decrease in oil production will come. However, for the last two decades, the amount of oil consumption per year has surpassed the amount of oil reserves newly found. Therefore, the possibility of ultimate decrease in oil production may increase. This paper examines the impact of the decrease in oil production on major economies using a computable general equilibrium model. Under the simulations in this paper, the oil exporting economies increase their GDPs, the utilities and the terms of trade. The oil importing regions, especially in newly industrialised and developing regions, decrease their GDPs, utilities and the terms of trade. All industry sectors decrease their world output. Among industry sectors, oil industry affects most and the industry sectors which use large amount of oil such as petroleum industry and chemical industry decrease its outputs significantly.
    JEL: L72
    Date: 2010
  6. By: Franck Lecocq (Laboratoire d'Economie Forestière, INRA - AgroParisTech); Sylvain Caurla (Laboratoire d'Economie Forestière, INRA - AgroParisTech); Philippe Delacote (Laboratoire d'Economie Forestière, INRA - AgroParisTech); Ahmed Barkaoui (Laboratoire d'Economie Forestière, INRA - AgroParisTech); Alexandre Sauquet (Laboratoire d'Economie Forestière, INRA - AgroParisTech)
    Abstract: Forests can contribute to climate mitigation by sequestrating carbon in forest biomass andby replacing fossil-fuel with fuelwood, with potentially conflicting implications for forest management.The present paper assesses the mitigation and the economic impacts of a "stock" policy(payment for sequestration in situ), a "substitution" policy (subsidy to fuelwood consumption),and a combination thereof on the French forest sector. The policies are consistent in that theyare based on the same social cost of carbon. To do so, we use the French Forest Sector Model(FFSM), which combines a dynamic model of French timber resource, and a dynamic partial equilibriummodel of the French forest sector. Simulations show that over the 2010-2020 period,the stock policy is the only one that performs better than Business As Usual (BAU) in terms ofcarbon. Over this period of time, the cumulative substitution benefits of the substitution policyare not sufficient to offset the loss of carbon in standing forests. However, the stock policy hasalso negative impacts on consumers welfare, and increasingly high costs as carbon in excess ofBAU is accumulated in forests. Combining both policies brings intermediate results and is thusless effective than focusing on a single policy.
    Keywords: carbon storage, biomass energy, forest sector modeling
    JEL: L52 Q23 Q42 Q54
    Date: 2010–06
  7. By: Sommer, Rolf; Djanibekov, Nodir; Salaev, Omonbek
    Abstract: Land use and crop production in the Khorezm region in western Uzbekistan, exemplarily for the irrigated low-lands of Central Asia, is adversely affected by the excessive, non-sustainable use of irrigation water on one hand, repeated droughts on the other hand, and by soil degradation by secondary salinization. One of the research objectives of the German-Uzbek Khorezm project, funded by the German Ministry for Education and Research (BMBF) and led by ZEF, is to better understand options for land use and choice of technology at the farm level in order to evaluate and propose technological alternatives and policy options for sustainable land use in Khorezm. To address the latter, the integrated so-called Farm-Level Economic-Ecological Optimization Model (FLEOM) was developed. FLEOM optimizes farm-level land and resource use while at the same time assessing the respective economic and environmental impacts. The model captures the basic features of the regional agriculture and the interrelations of production activities most prevalent to the local farmers. FLEOM builds on an economic farm-household linear-programming (LP) optimization routine and a comprehensive agronomic data base established with the cropping system simulation model, CropSyst. A graphical user-interface programmed in Java provides for easy usability, by which settings and results of FLEOM are visualized in tables and figures or as maps via a GIS-environment. The present discussion paper provides a technical introduction to FLEOM and discusses first application results.
    Keywords: Sustainability of agro-ecosystems, Integrated biophysical-economic modeling, Cropping system, Land use planning, Policy assessment, Agribusiness, Agricultural and Food Policy, Q12, O13, O21, Q18,
    Date: 2010–07
  8. By: Rania Antonopoulos; Kijong Kim; Tom Masterson; Ajit Zacharias
    Abstract: Massive job losses in the United States, over eight million since the onset of the “Great Recession,” call for job creation measures through fiscal expansion. In this paper we analyze the job creation potential of social service–delivery sectors-early childhood development and home-based health care-as compared to other proposed alternatives in infrastructure construction and energy. Our microsimulation results suggest that investing in the care sector creates more jobs in total, at double the rate of infrastructure investment. The second finding is that these jobs are more effective in reaching disadvantaged workers-those from poor households and with lower levels of educational attainment. Job creation in these sectors can easily be rolled out. States already have mechanisms and implementation capacity in place. All that is required is policy recalibration to allow funds to be channeled into sectors that deliver jobs both more efficiently and more equitably.
    Keywords: Social Care; Job Creation; Fiscal Expansion; Distribution; Infrastructure
    JEL: D30 E62 J48
    Date: 2010–08
  9. By: Balbás, Alejandro; Esteban Bravo, Mercedes; Vidal-Sanz, Jose M.
    Abstract: Marketing resource allocation is increasingly based on the optimization of expected returns on investment. If the investment is implemented in a large number of repetitive and relatively independent simple decisions, it is an acceptable method, but risk must be considered otherwise. The Markowitz classical mean-deviation approach to value marketing activities is of limited use when the probability distributions of the returns are asymmetric (a common case in marketing). In this paper we consider a unifying treatment for optimal marketing resource allocation and valuation of marketing investments in risky markets where returns can be asymmetric, using coherent risk measures recently developed in finance. We propose a set of first order conditions for the solution, and present a numerical algorithm for the computation of the optimal plan. We use this approach to design optimal advertisement investments in sales response management
    Keywords: Resource allocation; Coherent risk measures; Optimization; Sales response models;
    Date: 2009–10
  10. By: Kolsrud, Dag (Statistics Norway); Nymoen, Ragnar (Dept. of Economics, University of Oslo)
    Abstract: We derive aggregate supply (AS) relationships for an intermediate-run macro model. The wage-price spiral provides the conceptual framework for a synthesis of different contesting theoretical and empirical perspectives on the AS curve: the Phillips curve model (PCM) and the wage-price equilibrium correction model (WPECM). The generalized AS curve is grafted into a small macro model. We analyze stability conditions, steady states, and dynamic solutions, using a combination of algebra and simulations. The specification of the AS curve, as a PCM or a WPECM, is shown to be important for all aspects of the model’s solution, but within each model also the detailed parameterization is of qualitative importance. For example, endogenous cyclical fluctuations are typical for both nominal and real variables, e.g. inflation and unemployment.
    Keywords: AS-AD; cycles; dynamics; equilibrium correction; macroeconomics; nominal rigidity; Phillips curve; unemployment; wage-price spiral
    JEL: E24 E30 J50
    Date: 2010–05–01

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