nep-cmp New Economics Papers
on Computational Economics
Issue of 2015‒01‒19
six papers chosen by

  1. Are Armington Elasticities Different across Countries and Sectors? – A European Study By Zoryana Olekseyuk; Hannah Schürenberg-Frosch
  2. The Consequences of Social Pressures on Partisan Opinion Dynamics By Shyam Gouri Suresh; Scott Jeffrey
  3. Visualizing the Invisible Hand of Markets: Simulating complex dynamic economic interactions By Klaus Jaffe
  4. Trade-offs in Achieving Human Development Goals for Bangladesh By Sayeed, Yeasmin
  5. Efficiency, Policy Selection, And Growth In Democracy And Autocracy: A Formal Dynamical Model By Andrei S. Akhremenko; Alexander Petrov
  6. Emergency Medical Service System Design under Service Level Constraints for Heterogeneous Patients By Jayaswal, Sachin

  1. By: Zoryana Olekseyuk; Hannah Schürenberg-Frosch
    Abstract: CGE models are widely used for policy evaluation and impact analysis especially with respect to trade reforms, tax reforms, energy sector reform and development policy analysis. However, the results of such models are often argued to be sensitive to the choice of exogenous parameters such as trade elasticities. Several authors show that the choice of the so-called Armington elasticities in the import demand function has a strong influence on the simulation results. Most existing estimates of Armington elasticities are only for the US. The few studies for other countries find substantially differing results. Nevertheless, many CGE modelers simply adopt the elasticities from the literature. This paper aims at providing estimated elasticities based on recent data for a larger group of European countries. Using cointegration and panel fixed effects analyses we estimate the first order condition resulting from cost minimization or utility maximization subject to the CES subutility or cost function in imports and domestic goods. The results show a rather large variation across sectors and countries and the magnitude is only partly comparable to the US elasticities. Moreover, in a small CGE application we are able to show that changing the elasticity set has a quantitative and even qualitative impact on CGE model results, which confi rms the concern that one might end up with biased results due to a misspecification of the elasticities.
    Keywords: Informal care; labour supply; cognitive ability; physical and mental health
    JEL: I12 J14 J18 J22
    Date: 2014–11
  2. By: Shyam Gouri Suresh; Scott Jeffrey
    Abstract: We simulate a theoretical model of opinion dynamics that captures the effects of social pressures that compel individuals to publicly conform to the party line even when they disagree with it privately. We observe various interesting patterns of opinion formation and other consequences, including polarization within and between parties and marginalization of extremists. We find that our simple framework can explain certain features of recent data such as the influence of parties on individual opinions and the increasing polarization of the polity.
    Keywords: Opinion Dynamics, Polarization, Agent-Based, Overton Window
    JEL: D7 C63
    Date: 2014–12
  3. By: Klaus Jaffe
    Abstract: In complex systems, many different parts interact in non-obvious ways. Traditional research focuses on a few or a single aspect of the problem so as to analyze it with the tools available. To get an insight of phenomena that emerge from complex interactions, we need instruments that can analyze complex interactions of many parts simultaneously. Here, a simulator modeling different type of economies is explored in regard to its power in visualizing quantitatively complex aspects affecting the economic dynamics. The main conclusions are: 1- Relative simple economic settings produce complex non-linear dynamics and therefore linear regressions are unsuitable to capture complex economic dynamics; 2- Flexible pricing of goods by individual agents according to their micro-environment increases the health and wealth of the society, but price asymmetries between buyers and sellers have strong effects on the economic dynamics; 3- Prices for goods conferring high risk long term benefits are not tracked efficiently by simple market forces. 4- Division of labor creates synergies that improve enormously the health and wealth of the society by increasing the efficient of economic activity. 5- Stochastic modeling might predict some aspects of real economies, but didactic games based based on it might help policy makers and non specialists in grasping the complex dynamics underlying even simple economic settings.
    Date: 2014–12
  4. By: Sayeed, Yeasmin (Örebro University School of Business)
    Abstract: Even though Bangladesh has made progress towards reaching some of the Millennium Development Goals (MDGs), it is still a major challenge for the government to further reduce poverty and improve human developments, in particular achieving a 100 percent primary-school completion rate. As foreign aid is declining, resources need to be mobilized either by taxation or borrowing. Each funding option has drawbacks so it is important when government now chooses how to proceed to have an apprehension of the tradeoffs involved. Also issues arise in whether the composition of public spending should lean towards investment in human capital or infrastructural capital. In this paper, we apply the MAMS computable general equilibrium model developed by the World Bank to do a retrospective analysis study comparing a baseline scenario that mimics the actual development during the period 2005 - 2015 with four counterfactual scenarios in which the four most important MDG targets (education, child mortality, maternal mortality, water and sanitation) are achieved, based on either taxation, foreign borrowing, aid or domestic borrowing. Further, we compare the baseline with three public spending reallocation scenarios. We find that full achievement of these goals would have led to a GDP loss of 17 percent and 10 percent from domestic borrowing or taxation, respectively. For public spending composition we find that the marginal impact on achievement of the targets from reallocating public spending from infrastructure investment to human development sectors in Bangladesh is small.
    Keywords: MDGs; Infrastructure; Growth; CGE; MAMS
    JEL: H52 H54 O11 O15
    Date: 2014–12–12
  5. By: Andrei S. Akhremenko (National Research University Higher School of Economics); Alexander Petrov (National Research University Higher School of Economics)
    Abstract: The main focus of this paper is the impact of efficiency losses, related to public capital stock, on the prospects of economic growth in democratic and autocratic political environments. We introduce a distinction between two types of efficiency loss: along with the loss of public capital during its accumulation, we take into account the process of capital stock depreciation. We demonstrate that the decrease in efficiency of any type makes the probability of long-run growth higher for autocracies; however, in the presence of high efficiency, democracies tend to perform better. The results were obtained by formal analysis and computational experiments, realized on the basis of an original dynamical model.
    Keywords: dynamical formal model, policy space, democracy, autocracy, economic growth, efficiency, public capital
    JEL: C02 P16 Z18
    Date: 2014
  6. By: Jayaswal, Sachin
    Abstract: We study the problem of locating Emergency Medical Service (EMS) facilities in the presence of service level constraints for patients with acuity levels ranging from resuscitation to non-urgent. Each patient arriving at any EMS facility is triaged as either resuscitation/high priority or less urgent/low priority, where high priority patients are always served on a priority basis. The problem is to optimally locate EMS facilities and allocate their service zones to satisfy the following coverage and service level constraints: (i) each user zone is served by an EMS facility that is within a given coverage radius; (ii) at least h proportion of the resuscitation cases at any EMS facility should be admitted immediately without having to wait; (iii) at least l proportion of the cases belonging to low priority class at any EMS facility should not have to wait for more than l minutes. For this, we model the network of EMS facilities as spatially distributed M/M/1 priority queues, whose locations and user allocations need to be determined. The resulting integer programming problem is challenging to solve, especially in absence of any known analytical expression for the waiting time distribution of low priority customers in an M/M/1 priority queue. We develop a cutting plane based solution algorithm, exploiting the concavity of the waiting time distribution of low priority customers to approximate its non-linearity using tangent planes, determined numerically using matrix geometric method. Using a case study of locating EMS facilities in Austin, Texas, we present computational results and managerial insights.

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.