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on Computational Economics |
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Issue of 2013‒03‒23
nine papers chosen by |
| By: | Pape, Andreas; Kurtz, Kenneth |
| Abstract: | We introduce a computer program which calculates an agent’s optimal behavior according to Case-based Decision Theory (Gilboa and Schmeidler, 1995) and use it to test CBDT against a benchmark set of problems from the psychological literature on human classification learning (Shepard et al., 1961). This allows us to evaluate the efficacy of CBDT as an account of human decision-making on this set of problems. We find: (1) The choice behavior of this program (and therefore Case-based Decision Theory) correctly predicts the empirically observed relative difficulty of problems and speed of learning in human data. (2) ‘Similarity’ (how CBDT decision makers extrapolate from memory) is decreasing in vector distance, consistent with evidence in psychology (Shepard, 1987). (3) The best-fitting parameters suggest humans aspire to an 80 − 85% success rate, and humans may increase their aspiration level during the experiment. (4) Average similarity is rejected in favor of additive similarity. |
| Keywords: | Case-based Decision Theory, Human Cognition, Learning, Agent-based Computational Economics, Psychology, Cognitive Science |
| JEL: | C63 C88 D83 |
| Date: | 2013–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45206&r=cmp |
| By: | Luca Tiberti; Hélène Maisonnave; Margaret Chitiga; Ramos Mabugu; Véronique Robichaud; Stewart Ngandu |
| Abstract: | We examine the economy-wide impact of the child support grant (CSG) on the South African economy using a bottom-up/top-down approach. This allows us to estimate the potential effects on households’ welfare and on the economy following a change in the CSG. Three simulations are presented, in simulation 1 the value of the CSG is increased by 20%; in simulation 2 the number of beneficiaries among the eligible children is increased by two million and simulation 3 combines these two. A positive link between the CSG and the probability of participating in the labour market is found. The positive impacts on the labour market, together with the increase in the transfers received by households, results in an increase in their income. Poverty decreases in comparison with the base year for the whole population and for children. Finally, we can conclude that simulation 1 is the most cost effective of the policies. |
| Keywords: | Child support grant, computable general equilibrium, micro-simulation, poverty, South Africa |
| JEL: | D58 E24 E6 H53 I3 J01 O55 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1303&r=cmp |
| By: | Joshua Elliott; Don Fullerton |
| Abstract: | One country that tries to reduce greenhouse gas emissions may fear that other countries get a competitive advantage and increase emissions (“leakage”). Estimates from computable general equilibrium (CGE) models such as Elliott et al (2010a,b) indicate that 15% to 25% of abatement might be offset by leakage. Yet the Fullerton et al (2012) analytical general equilibrium model shows an offsetting term with negative leakage. To derive analytical expressions, their model is quite simple, with only one good from each country or sector, a fixed stock of capital, competitive markets, and many identical consumers that purchase both goods. Their model is not intended to be realistic, but only to demonstrate the potential for negative leakage. Most CGE models do not allow for negative leakage. In this paper, we use a full CGE model with many countries and many goods to measure effects in a way that allows for negative leakage. We vary elasticities of substitution and confirm the analytical model’s prediction that negative leakage depends on the ability of consumers to substitute into the untaxed good and the ability of firms to substitute from carbon emissions into labor or capital. |
| JEL: | H23 Q56 Q58 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18897&r=cmp |
| By: | Oscar Bajo-Rubio (Universidad de Castilla-La Mancha); Antonio G. Gómez-Plana (Universidad Pública de Navarra) |
| Abstract: | In this paper, we examine the effects of several alternative measures intended to reduce government deficits, distinguishing between those acting through either taxes or spending, for the case of Spain. The empirical methodology is based on a computable general equilibrium model. All the simulated policies lead to a decrease in the levels of output and employment, and to a higher unemployment rate. Spending cuts show greater contractionary effects than tax increases, and are associated with a worsening in the distribution of income for labour. These effects are stronger in the case of spending cuts in Public education. |
| Keywords: | Computable general equilibrium, Government deficit, Taxes, Spending |
| JEL: | C68 H62 H20 H50 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:aee:wpaper:1302&r=cmp |
| By: | Elsa Cristina Vaz; Maria Paula Fontoura |
| Abstract: | The purpose of this paper is to analyse, for the case of Portugal, the effectiveness of wage reduction - a current proposal since 2011 to help the country to reverse the high public and external debt - in promoting the efficiency and international competitiveness of the economy. A static multi-sector and single-country general equilibrium model is used and data is collected from the GTAP7 Database. The model allows the measurement of changes by sector. The simulations performed show that extending the reduction of wages already deployed by the government in the public sector to the private sector leads to a positive impact on employment (both skilled and unskilled labour), production and volume of exports in all sectors except those that are R&D intensive, the latter having a low weight in the Portuguese economy. However, it is possible that the positive results in terms of external competitiveness are not sustainable, as the impact on productivity is negative, albeit small, for most sectors. There are also reasons for concern regarding the observed deterioration of the trade balance of most sectors, the exception being the traditional labour intensive sectors, which show good prospects in this respect. |
| Keywords: | Competitiveness, wages, Stability and Growth Pact; General, Equilibrium Model, Portugal. |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp032013&r=cmp |
| By: | Masashi Ieda; Takashi Yamashita; Yumiharu Nakano |
| Abstract: | We propose a long term portfolio management method which takes into account a liability. Our approach is based on the LQG (Linear, Quadratic cost, Gaussian) control problem framework and then the optimal portfolio strategy hedges the liability by directly tracking a benchmark process which represents the liability. Two numerical results using empirical data published by Japanese organizations are served: simulations tracking an artificial liability and an estimated liability of Japanese organization. The latter one demonstrates that our optimal portfolio strategy can hedge his or her liability. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1303.3956&r=cmp |
| By: | Chahim, M. (Tilburg University) |
| Abstract: | The contribution of this paper is threefold. First, this thesis extends the existing theory on Impulse Control by deriving the necessary optimality conditions in current value formulation and provide a transformation such that the Impulse Control Maximum Principle can be applied to problems having a fixed cost. Moreover, this thesis points out that meaningful problems do not satisfy the sufficiency conditions. Second, in this thesis the Impulse Control Maximum Principle is applied to dike height optimization, forest management and product innovation. Third, this thesis describes several algorithms that can be used to solve Impulse Control problems |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ner:tilbur:urn:nbn:nl:ui:12-5904399&r=cmp |
| By: | Hart E. Posen; Dirk Martignoni; Daniel A. Levinthal |
| Abstract: | Learning from experience is a central theme in the management literature. While in general experiential learning is viewed as efficacious, the literature increasingly points to the difficulties inherent in the learning process — many of which stem from a deficit of information about the merits of alternative solutions. It seems plausible that larger organizations, with their capacity to simultaneously pursue a variety of potential solutions to a given challenge, may overcome this deficit. Such a perspective suggests that the efficacy of an organization's learning process should be an increasing function of organizational size. While this logic is intuitively appealing, we find that it does not fully capture the nuances of the organizational learning process. We employ a computational model and find that larger organizations, as characterized by their scale in pursuing parallel initiatives: (a) explore less than smaller organizations, (b) are less likely to discover the very best alternative, and yet (c) on average identify better alternatives. Increasing the number of parallel initiatives guides the search process towards viable alternatives, but it does so at the cost of inhibiting search breadth. Thus, in our model, the characteristics of learning by larger organizations do not result from differences in inertia or incentives that may impede learning and innovation, but rather from the properties of the organizational learning process itself. |
| Keywords: | - |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:aal:abbswp:13-09&r=cmp |
| By: | González, Ignacio (European University Institute); Sala, Hector (Universitat Autònoma de Barcelona) |
| Abstract: | This paper studies the impact of financialization on unemployment in the U.S. We estimate a dynamic multi-equation macro labor model including labor demand, labor supply, wage-setting and capital accumulation equations. Financialization appears as a key determinant of capital accumulation which, in turn, is the transmission channel towards its unemployment effects. We conduct a series of counterfactual simulations where we quantify the macroeconomic consequences of the recent swings experienced by the financialization process. We find that it has had relevant unemployment effects in all periods considered, even in those where financial payments were not the main driver of capital accumulation. We also identify a structural change in the financialization process in the early 1980s, and find that it has caused U.S. unemployment to systematically fluctuate around 2 percentage points above what it would otherwise have done. We call for a reappraisal of the way financial markets work, and stress the vital need of preventing financial devices that result in productive investment crowding-out. |
| Keywords: | financialization, capital accumulation, unemployment, chain reaction theory |
| JEL: | D2 E22 E24 G2 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7272&r=cmp |