nep-cmp New Economics Papers
on Computational Economics
Issue of 2013‒06‒30
five papers chosen by
Stan Miles
Thompson Rivers University

  1. Climate Change and Economic Growth: An Intertemporal General Equilibrium Analysis for Egypt By Elshennawy, Abeer; Robinson, Sherman; Willenbockel, Dirk
  2. The VATTAGE Regional Model VERM - A Dynamic, Regional, Applied General Equilibrium Model of the Finn By Juha Honkatukia
  3. Modelling Complex Emissions Intensity Targets with a Simple Simulation Algorithm By Yiyong Cai; Yingying Lu; David Newth; Alison Stegman
  4. Exploring or reducing noise? A global optimization algorithm in the presence of noise By Didier Rullière; Alaeddine Faleh; Frédéric Planchet; Wassim Youssef
  5. Modelling the Dynamic Effects of Transfer Policy: The LINDA Policy Analysis Tool By Justin van de Ven; Paolo Lucchino

  1. By: Elshennawy, Abeer; Robinson, Sherman; Willenbockel, Dirk
    Abstract: Due to the high concentration of economic activity along the low-lying coastal zone of the Nile delta and its dependence on Nile river streamflow, Egypt's economy is highly exposed to adverse climate change. Adaptation planning requires a forward-looking assessment of climate change impacts on economic performance at economy-wide and sectoral level and a cost-benefit assessment of conceivable adaptation investments. This study develops a multisectoral intertemporal general equilibrium model with forward-looking agents, population growth and technical progress to analyse the long-run growth prospects of Egypt in a changing climate. Based on a review of existing estimates of climate change impacts on agricultural productivity, labor productivity and the potential losses due to sea-level rise for the country, the model is used to simulate the effects of climate change on aggregate consumption, investment and welfare up to 2050. Available cost estimates for adaptation investments are employed to explore adaptation strategies. On the methodological side, the present study overcomes the limitations of existing recursive-dynamic computable general models for climate change impact analysis by incorporating forward-looking expectations. Moreover, it extends the existing family of discrete-time intertemporal computable general equilibrium models to which our model belongs by incorporating population growth and technical progress. On the empirical side, the model is calibrated to a social accounting matrix that reflects the observed current structure of the Egyptian economy, and the climate change impact and adaptation scenarios are informed by a close review of existing quantitative estimates for the size order of impacts and the costs of adaptation measures. The simulation analysis suggests that in the absence of policy-led adaptation investments, real GDP towards the middle of the century will be nearly 10 percent lower than in a hypothetical baseline without climate change. A combination of adaptation measures, that include coastal protection investments for vulnerable sections along the low-lying Nile delta, support for changes in crop management practices and investments to raise irrigation efficiency, could reduce the GDP loss in 2050 to around 4 percent.
    Keywords: Climate change adaptation, Computable general equilibrium analysis, Dynamic CGE
    JEL: C68 D9 D90 E17 O44 Q54
    Date: 2013–01
  2. By: Juha Honkatukia
    Abstract: Applied general equilibrium models have become a standard tool for the analysis of structural policies in many countries and international research organisations. Their use has been prompted by both developments in economics, but also on the growing need for quantitative policy analysis. The analysis of actual policy options mandates the use of numerical methods, but there are several other reasons to suggest the use of AGE models in particular. Chief among these is the applicability of models that rely on explicit optimisation on the analysis of welfare impacts of structural policies. It may also be the case that many policy issues are intractable by theoretical models, for example, when the policies concern several sectors or regions of the economy, or involve contradicting effects.<br><br> This report describes the VERM model used in VATT, the Government Institute for Economic Research. The model has been used to study the effects of various tax policies, regional policies, and environmental policies on the economy. Lately, the model has seen extensive use in the anticipation of regional development, especially in the labour markets. The report contains a full description of the model code and its underlying theory. With the help of examples, it also shows how simulation results can be interpreted.
    Keywords: AGE models, simulation models
    JEL: H30 E60 C68 R13 H20
    Date: 2013–05–08
  3. By: Yiyong Cai; Yingying Lu; David Newth; Alison Stegman
    Abstract: Designing, modelling and analysing global emissions policies are becoming increasingly complex undertakings. Pressure on developing economies to make quantifiable emissions reduction commitments has led to the introduction of intensity based emissions targets, where reductions in emissions are specified with reference to some measure of output, generally gross domestic product. The Copenhagen commitments of China and India are two prominent examples. From a modelling perspective, intensity targets substantially increase the complexity of analysis, with respect to both theoretical design and computational implementation. Here, a clear and practically relevant theoretical design is used to present a new algorithm that can be applied to frameworks that model the complex interaction that occurs between emissions policy instruments, emissions levels and output effects under an emissions intensity target. The coding of the algorithm has been simplified to allow for easy integration into a range of modelling frameworks. Further development of the algorithm that allows for more complex theoretical design structures is possible.
    Date: 2013–05
  4. By: Didier Rullière (SAF - Laboratoire de Sciences Actuarielle et Financière - Université Claude Bernard - Lyon I : EA2429); Alaeddine Faleh (SAF - Laboratoire de Sciences Actuarielle et Financière - Université Claude Bernard - Lyon I : EA2429); Frédéric Planchet (SAF - Laboratoire de Sciences Actuarielle et Financière - Université Claude Bernard - Lyon I : EA2429); Wassim Youssef (Winter & associés - Winter & associés)
    Abstract: We consider the problem of the global minimization of a function observed with noise. This problem occurs for example when the objective function is estimated through stochastic simulations. We propose an original method for iteratively partitioning the search domain when this area is a nite union of simplexes. On each subdomain of the partition, we compute an indicator measuring if the subdomain is likely or not to contain a global minimizer. Next areas to be explored are chosen in accordance with this indicator. Con dence sets for minimizers are given. Numerical applications show empirical convergence results, and illustrate the compromise to be made between the global exploration of the search domain and the focalization around potential minimizers of the problem.
    Keywords: Golbal Optimisation; Simplex; Branch-and-Bound; Kriging
    Date: 2013
  5. By: Justin van de Ven (National Institute of Economic and Social Research, London; Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Paolo Lucchino (National Institute of Economic and Social Research, London)
    Abstract: This paper describes a structural dynamic microsimulation model that generates individual-specific data over a range of demographic and economic characteristics at annual intervals over the life-course. The model is specifically designed to analyse the distributional implications of policy alternatives in terms of their bearing on income and consumption measured over alternative time periods, from one year up to the entire life-course. This focus on economic characteristics measured over appreciable periods of life motivates endogenous simulation of savings and labour supply decisions, taking explicit account of uncertainty regarding the evolving decision environment. Reflecting the demands of policy makers, and in contrast to the majority of the associated literature, the model described here is designed to project from data observed for a population cross-section.
    Keywords: Dynamic programming, savings, labor supply
    JEL: C51 C61 C63 H31
    Date: 2013–06

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