New Economics Papers
on Computational Economics
Issue of 2014‒02‒21
seven papers chosen by

  1. Multivariate risk sharing and the derivation of individually rational Pareto optima By Alain Chateauneuf; Mina Mostoufi; David Vyncke
  2. Economic Growth in the Euro-Med Area through Trade Integration: Focus on Agriculture and Food – The case of Turkey By Erol H. Cakmak; Hasan Dudu
  3. A Historical CGE Simulation of the South African Economy from 2006–2013: Analysing Changes in the Use of Primary Factors by Industries By Heinrich R. Bohlmann; Martin C. Breitenbach
  4. Transition to sustainability? Feasible scenarios towards a low-carbon economy By Bernardo, Giovanni; D'Alessandro, Simone
  5. Millennium Development Goals Scenarios to 2015 and Beyond: An Integrated Micro-Macro Modelling Approach By Briones, Roehlano M.
  6. The relevance of fiscal rules for fiscal and yield developments By António Afonso; Ana Sofia Guimarães
  7. EU sugar policy: A sweet transition after 2015 ? By Alison Burrell; Mihaly Himics; Benjamin Van Doorslaer; Pavel Ciaian; Shailesh Shrestha

  1. By: Alain Chateauneuf (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris 1 - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, IPAG Business School - Business School); Mina Mostoufi (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris 1 - Panthéon-Sorbonne); David Vyncke (Universiteit Gent - Vakgroep Toegepaste Wiskunde en Informatica)
    Abstract: Considering that a natural way of sharing risks in insurance companies is to require risk by risk Pareto optimality, we offer in case of strong risk aversion, a simple computable method for deriving all Pareto optima. More importantly all Individually Rational Pareto optima can be computed according to our method.
    Keywords: Multivariate risk sharing; comonotonicity; individually rational Pareto optima
    Date: 2014–01
  2. By: Erol H. Cakmak (TED University Ankara Turkey); Hasan Dudu (European Commission – JRC - IPTS)
    Abstract: In this study, we analyse the effects of trade liberalization, world price increase of basic staple and productivity growth in agricultural activities on Turkey by using a dynamic CGE model calibrated to 2008 data. The simulation results suggest that Turkish economy is capable of accommodating the adverse effects of trade liberalization. There are significant welfare gains if trade liberalization is accompanied by the CAP payments in the accession scenario. Trade policy turns out to be a strong instrument to stabilize the domestic prices and avoid the adverse effects of world price increase. Productivity increase in agri-food production has prominent effects on welfare and trade.
    Keywords: Trade Liberalization, Dynamic CGE Model, Agriculture, Turkey
    JEL: C68 D58 Q17 Q27
    Date: 2014–01
  3. By: Heinrich R. Bohlmann (Department of Economics, University of Pretoria); Martin C. Breitenbach (Department of Economics, University of Pretoria)
    Abstract: This paper uses a dynamic CGE model to help explain some apparent contradictions between changes in the structure of the South African economy and movements in related variables over the 2006 to 2013 period. Most notably, an increase in the capital-labour ratio was identified, despite a relative increase in the price of capital rentals. To calibrate this result with conventional economic theory suggests that a change in the preferred capital-labour ratio of industries must have occurred. We quantify this change and comment on what this means for policymakers trying to reduce the country’s high level of unemployment. Other changes to the economy over this period are also quantified and explained.
    Keywords: CGE Simulation, South African Economy, Analysing changes, Primary Factors
    Date: 2014–02
  4. By: Bernardo, Giovanni; D'Alessandro, Simone
    Abstract: This paper analyses different policies that may promote the transition towards a low-carbon economy. We present a dynamic simulation model where three different strategies are identified: improvements in energy efficiency, the development of the renewable energy sector, and carbon capture and storage. Our aim is to evaluate the dynamics that the implementation of these strategies may produce in the economy, looking at different performance indicators, such as the GDP growth rate, unemployment, labour share, carbon emissions, and renewable energy production. Scenario analysis shows that a number of tradeoffs between social, economic and environmental indicators emerge. Such tradeoffs undermine an `objective' definition of sustainability.
    Keywords: sustainability, energy transition, system dynamics, scenario analysis.
    JEL: C63 E2 Q01 Q43
    Date: 2014–02–15
  5. By: Briones, Roehlano M.
    Abstract: The Philippines has made considerable progress in attaining the Millennium Development Goals (MDGs). However, achieving all the targets remains a daunting challenge, with goals for poverty, education, and maternal mortality unlikely to be attained by 2015. Focus has now shifted to informing the post-2015 development agenda, based on future scenarios for the macroeconomy and the MDGs. In this study, such assessment is done using an integrated macro-micro modelling approach, using the Maquette for MDG Simulation (MAMS), calibrated to Philippine data, over the period 2009-2025. Findings for the scenario analysis are as follows: In the Base or business-as-usual scenario, MDG targets for household water and sanitation, as well as child health, will be met (or approximated) by 2015. However, those for education and maternal health will be attained in 2025 and 2021, respectively. The goal for poverty will not be achieved even by 2025. The national debt follows a downward trajectory over the simulation period. Meanwhile in the alternative scenarios, significantly higher outlays for primary education, health, and infrastructure (equivalent to 2% of GDP) lead to earlier attainment of the education and maternal health goals (2019 and 2016, respectively); likewise significant gains will be realized in terms of per capita income and poverty reduction by 2025. Tax financing of higher outlays maintains the debt reduction path in the Base; however, financing through increased borrowing from abroad leads to persistent escalation of foreign debt. Hence, government should be cautious about proposals for dramatic increases in social spending and infrastructure to more quickly close development gaps, unless it is able to accompany increases in spending with commensurate tax effort.
    Keywords: computable general equilibrium (CGE), fiscal sustainability, poverty reduction, human development, millennium development goals (MDG), inclusive growth
    Date: 2014
  6. By: António Afonso; Ana Sofia Guimarães
    Abstract: Numerical fiscal rules mitigate the bias of pro-cyclicality, as an alternative to discretionary measures conducted by policy makers. We assess whether fiscal rules impact budget balances and sovereign yields, and we perform a simulation exercise to compute debt developments of EU countries, assuming that they had implemented a numerical expenditure rule in 1990. Our panel analysis covers 27 EU countries between 1990 and 2011. We find that fiscal rules contribute to the reduction of budget deficits, specifically expenditure rules, which significantly impact primary expenditure and conclude that countries with rules experienced lower sovereign bond yields. The simulations show that when the same rule is applied to different countries, it produces very different results, particularly on account of the initial level of primary expenditure.
    Keywords: numerical fiscal rules, expenditure rules, budget balance, sovereign yields.
    JEL: C33 E62 G15 H62
    Date: 2014–01
  7. By: Alison Burrell; Mihaly Himics (Institute for Food and Resource Economics, Bonn University, Germany); Benjamin Van Doorslaer (European Commission – JRC - IPTS); Pavel Ciaian (European Commission – JRC - IPTS); Shailesh Shrestha (Scottish Agricultural College)
    Abstract: This report compares the production and market outcomes of two alternative policy scenarios, namely expiry of EU sugar quotas in 2015/16 and extension of the current sugar quota scheme. All other EU policy measures pertaining to the sugar sector, and to agriculture more generally, are assumed the same in both scenarios. The year of comparison is 2020. The CAPRI model was used for the simulations. The report begins with a description of sugar production within the EU, and outlines the policies applied in the sugar sector within the EU’s Common Agricultural policy. This is followed by a description of the EU sugar market. A theoretical model is used to summarise the main functional relationships in the EU sugar market and related markets, and the EU’s trade in sugar, from which a number of theory-based predictions about the impacts of quota expiry are derived. Isoglucose quotas will expire along with sugar quotas, and there is much speculation about the extent of potential competitive substitution between the two sweeteners. Sensitivity analysis was performed to obtain greater insight into this issue. Two additional quota-expiry scenarios were run, in which isoglucose was assumed to take a 10% and a 20% share of the sweetener market at the expense of sugar. The main findings are: production of sugar beet and white sugar increases by around 4%; there is little net impact on the production of cereals; total ethanol production hardly changes, but the importance of sugar as an ethanol feedstock declines by a few percentage points; raw sugar imports from high-cost third countries decline very substantially, but those from the low-cost producer Brazil decrease only slightly; EU sugar exports fall; EU human consumption of sugar increases only marginally, despite a fall of 15-16% in beet prices for sugar for internal human consumption; there is a very small positive welfare change, although income accruing to sugar beet producers falls by over 17%.
    Keywords: Economic analysis, impact assessment, Common Agricultural Policy, sugar quota, agricultural trade, competitiveness
    JEL: F14 Q02 Q11 Q18
    Date: 2014–01

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