nep-cmp New Economics Papers
on Computational Economics
Issue of 2011‒11‒07
six papers chosen by
Stan Miles
Thompson Rivers University

  1. Assessing Value in Product Networks By Gal OEstreicher-Singer; Barak Libai
  2. Simulating heterogeneous multinational firms By Arita, Shawn; Tanaka, Kiyoyasu
  3. Domestic, vertical, and horizontal multinationals : a general equilibrium approach using the "knowledge capital model" By Oyamada, Kazuhiko; Uchida, Yoko
  4. "Reducing Economic Imbalances in the Euro Area: Some Remarks on the Current Stability Programs, 2011–14" By Gregor Semieniuk; Till van Treeck; Achim Truger
  5. Evaluation of Economically Optimal Retrofit Investment Options for Energy Savings in Buildings By Kumbaroğlu, Gürkan; Madlener, Reinhard
  6. Impact Analysis of Changes in The Price of Water Resources in China and Beijing By Masaru Ichihashi; Shinji Kaneko

  1. By: Gal OEstreicher-Singer (Tel Aviv University); Barak Libai (Interdisciplinary Center)
    Abstract: Traditionally, the value of a product has been assessed according to the direct revenues the product creates. However, products do not exist in isolation but rather influence one another's sales. Such influence is especially evident in eCommerce environments, where products are often presented as a collection of webpages linked by recommendation hyperlinks, creating a large-scale product network. Here we present the first attempt to use a systematic approach to estimate products' true value to a firm in such a product network. Our approach, which is in the spirit of the PageRank algorithm, uses easily available data from large-scale electronic commerce sites and separates a product’s value into its own intrinsic value, the value it receives from the network, and the value it contributes to the network. We apply this approach to data collected from and from Focusing on one domain of interest, we find that if products are evaluated according to their direct revenue alone, without taking their network value into account, the true value of the "long tail" of electronic commerce may be underestimated, whereas that of bestsellers might be overestimated.
    Keywords: networks, product networks, electronic commerce, ecommerce, recommender systems, long tail
    JEL: D4
    Date: 2011–09
  2. By: Arita, Shawn; Tanaka, Kiyoyasu
    Abstract: This paper develops a micro-simulation framework for multinational entry and sales activities across countries. The model is based on Eaton, Kortum, and Kramarz's (2010) quantitative trade model adapted towards multinational production. Using micro data on Japanese manufacturing firms, we first stylize the empirical regularities of multinational entry and sales activity and estimate the model's structural parameters with simulated method of moments. We then demonstrate that our adapted model is able to replicate important dimensions of the in-sample moments conditioned in our estimation strategy. Importantly, it is able to replicate activity under an economic period with a far different level of FDI barriers than was conditioned upon in our estimation sample. Overall, our research highlights the richness of the simulation framework for performing counterfactual analysis of various FDI policies.
    Keywords: International business enterprises, Foreign investments, Multinational firms, FDI, Firm heterogeneity, Simulation, Model validation
    JEL: F10 F23 L25 R12 R30
    Date: 2011–04
  3. By: Oyamada, Kazuhiko; Uchida, Yoko
    Abstract: One of the key factors behind the growth in global trade in recent decades is an increase in intermediate input as a result of the development of vertical production networks (Feensta, 1998). It is widely recognized that the formation of production networks is due to the expansion of multinational enterprises' (MNEs) activities. MNEs have been differentiated into two types according to their production structure: horizontal and vertical foreign direct investment (FDI). In this paper, we extend the model presented by Zhang and Markusen (1999) to include horizontal and vertical FDI in a model with traded intermediates, using numerical general equilibrium analysis. The simulation results show that horizontal MNEs are more likely to exist when countries are similar in size and in relative factor endowments. Vertical MNEs are more likely to exist when countries differ in relative factor endowments, and trade costs are positive. From the results of the simulation, lower trade costs of final goods and differences in factor intensity are conditions for attracting vertical MNEs.
    Keywords: Developing countries, Developed countries, Foreign investments, International business enterprises, Foreign Direct Investment, Knowledge-Capital Model
    JEL: F21 F23
    Date: 2011–03
  4. By: Gregor Semieniuk; Till van Treeck; Achim Truger
    Abstract: This paper evaluates whether the 2011 national stability programs (SPs) of the euro area countries are instrumental in achieving economic stability in the European Monetary Union (EMU). In particular, we analyze how the SPs address the double challenge of public deficits and external imbalances. Our analysis rests, first, on the accounting identities of the public, private, and foreign financial balances; and second, on the consideration of all SPs at once rather than separately. We find that conclusions are optimistic regarding GDP growth and fiscal consolidation, while current account rebalancing is neglected. The current SPs reach these conclusions by assuming strong global export markets, entrenched current account imbalances within the EMU as well as the deterioration of private financial balances in the current account deficit countries. By means of our simulations we conclude, on the one hand, that the failure of favorable global macroeconomic developments to materialize may lead to the opposite of the desired stability by exacerbating imbalances in the euro area. On the other hand, given symmetric efforts at rebalancing, the simulation suggests that for surplus countries that reduce their current account, a more expansionary fiscal policy will likely be required to maintain growth rates.
    Keywords: Euro Area; Stability Programs; Current Account Imbalances; Fiscal Policy; Stability and Growth Pact
    JEL: E10 E17 E62 F42
    Date: 2011–10
  5. By: Kumbaroğlu, Gürkan (Department of Industrial Engineering, Boğaziçi University); Madlener, Reinhard (E.ON Energy Research Center, Institute for Future Energy Consumer Needs and Behavior (FCN), RWTH Aachen University)
    Abstract: In this study, a techno-economic evaluation methodology for energy retrofit of buildings is introduced, geared towards finding the economically optimal set of retrofit measures. Split incentives of building owners and users are considered explicitly in a conventional (static) evaluation to identify the investment alternatives maximizing the net present value (NPV). Energy price uncertainty for various distributional assumptions of the stochastic variables is addressed through Monte Carlo simulation. Results from the simulation are used to compute probabilities and expected NPVs. Based on this, a sequential (dynamic) evaluation methodology is developed, featuring a real options investment appraisal. The methodological advancements introduced are applied to an office building, illustrating the model’s performance. The case study results indicate that energy price changes significantly affect the profitability of retrofit investments, and that increased price volatility creates a substantial value of waiting, making it more rational to postpone the investment. Further insight is gained on various aspects of economic decision-making concerning energy retrofit of buildings.
    Keywords: Building energy efficiency; Energy conservation; Net present value; Real options
    Date: 2011–09
  6. By: Masaru Ichihashi; Shinji Kaneko (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: This paper aims to analyze the impact of changes in resource prices on intra-region goods supply and on extra-region changes in prices, as well as possible impacts on the demand side, using China and Beijing as examples for analysis. Results of the analysis with Input-Output model and CGE model demonstrate that changes in the price of water supply do not have as significant an impact as is the case with energy goods such as electrical power or oil and mining. Also, another result with International IO model shows that an increase in the price of water resources in China would first induce changes in the prices of some domestic goods (education and research, chemical fertilizers, etc.); the effect on other countries would be relatively large in countries including Malaysia, Thailand, Singapore, and South Korea, and in the industries of flour milling, heavy electrical equipment, knitting, non-ferrous metals, and apparel. However, all of these impacts would be minimal.
    Keywords: water resources; energy price rising effect; International Input-Output; CGE model.
    JEL: F18 O13 Q56
    Date: 2011–11

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