nep-cmp New Economics Papers
on Computational Economics
Issue of 2015‒08‒07
five papers chosen by
Stan Miles
Thompson Rivers University

  1. Land Use in Rural New Zealand: Spatial Land-use, Land-use Change, and Model Validation By Anastasiadis, Simon; Kerr, Suzi; Zhang, Wei; Allan, Corey; Power, William
  2. Going Dutch? The Impact of Oil Price Shocks on the Canadian Economy By Jared C. Carbone; Kenneth J. McKenzie
  3. Atlantic versus Pacific Agreement in Agri-food Sectors: Does the Winner Take it All? By Disdier, Anne-Célia; Emlinger, Charlotte; Fouré, Jean
  4. Price Volatility, Tariff Structure and the Special Safeguard Mechanism By Leister, Amanda M.; Narayanan, Badri
  5. Adverse Selection, Risk Sharing and Business Cycles By Marcelo Veracierto

  1. By: Anastasiadis, Simon; Kerr, Suzi; Zhang, Wei; Allan, Corey; Power, William
    Abstract: Land is an important social and economic resource. Knowing the spatial distribution of land use and the expected location of future land-use change is important to inform decision makers. This paper documents and validates the baseline land-use maps and the algorithm for spatial land-use change incorporated in the Land Use in Rural New Zealand model (LURNZ). At the time of writing, LURNZ is the only national-level land-use model of New Zealand. While developed for New Zealand, the model provides an intuitive algorithm that would be straightforward to apply to different locations and at different spatial resolutions. LURNZ is based on a heuristic model of dynamic land-use optimisation with conversion costs. It allocates land-use changes to each pixel using a combination of pixel probabilities in a deterministic algorithm and calibration to national-level changes. We simulate out of sample and compare to observed data. As a result of the model construction, we underestimate the “churn” in land use. We demonstrate that the algorithm assigns changes in land use to pixels that are similar in quality to the pixels where land-use changes are observed to occur. We also show that there is a strong positive relationship between observed territorial-authority-level dairy changes and simulated changes in dairy area.
    Keywords: Agriculture, land use, LURNZ, maps, rural, spatial, land-use model, model validation, Agribusiness, Land Economics/Use, R52, R13, Q15, C52,
    Date: 2014–08
  2. By: Jared C. Carbone (Division of Economics and Business, Colorado School of Mines); Kenneth J. McKenzie (Department of Economics, University of Calgary)
    Abstract: We examine the steady-state impact of a 10 percent reduction in the price of oil using a CGE model of the Canadian economy. The model includes a high degree of disaggregation at both the sectoral and provincial level, international and interprovincial flows of goods and services, labour which is mobile between sectors, capital which is partly mobile both inter-provincially and inter-sectorally, and equilibrium exchange rate adjustments arising from the oil price shock. The key result of our simulations is that--on balance--a negative oil price shock leaves Canadians worse off. We also find that the welfare losses associated with a negative oil price shock are shared broadly across the provinces. The corollary, of course, is that a positive price shock leaves Canadians better off. Our results have implications for the presence (or significance) of Dutch Disease in Canada; we argue that the "disease" is just one of a number of effects generated by oil-price changes.
    Keywords: resource curse, dutch disease, petroleum markets, Canada, computable general equilibrium
    Date: 2015–06
  3. By: Disdier, Anne-Célia; Emlinger, Charlotte; Fouré, Jean
    Abstract: Two main regional trade agreements are currently under negotiation: The Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP). The former involves the United States and the European Union and deals with the removal of remaining tariffs and the harmonization of non-tariff measures, while the latter currently includes the United States and 11 other countries and focuses mainly on tariffs. Trade liberalization of the agri-food sector is a sensitive topic in both TTIP and TPP discussions. This paper first provides an overview of the current flows and trade barriers. Using a general equilibrium model of international trade (the MIRAGE model), it then assesses the potential impact of these two agreements on agri-food trade and value added. Results suggest that the US have a huge interest in both agreements for their agri-food sectors, while almost all their partners and third countries would benefit less and even register losses in some sectors. The two agreements however do not compete much one with the other, since all defensive and offensive interests of contracting parties are complementary. Finally, the Atlantic trade may be impacted by the inclusion of standards harmonization within the Pacific Agreement but not by its extension to additional members (e.g. China or India).
    Keywords: Mega-trade deals, agri-food, CGE model, Transatlantic Trade and Investment Partnership, Trans-Pacific Partnership, Agricultural and Food Policy, International Relations/Trade, F13, F15, Q17,
    Date: 2015
  4. By: Leister, Amanda M.; Narayanan, Badri
    Abstract: Agricultural commodity and food price volatility has been a central focus by policy makers around the globe. Following price spikes in 2008, 2011 and 2012, much attention has been given to price fluctuations as poor households are more negatively affected by extreme variation in prices rather than the increasing levels of prices alone. Two key contentious policy measures within the WTO that affect both the levels and potential variability in commodity prices include specific tariffs and the proposed Special Safeguard Mechanism (SSM). Both policies are shown to be discriminatory in nature towards developing countries (Chowdri, 2012 and Hertel et al. 2010). However, while the SSM is expected to increase agricultural price volatility, the use of specific tariffs may be volatility reducing when compared to an ad valorem tariff structure. This research investigates the potential for reduced commodity price volatility in the presence of the SSM, given the use of specific rather than ad valorem tariffs. Our works implements the SSM in a computable general equilibrium modeling framework and finds evidence of decreased variability of producer prices, import prices, and output in most developed and developing countries when specific tariffs are accounted for.
    Keywords: Special Safeguard Mechanism, Specific Tariffs, Agricultural Trade, Trade Policy, CGE Modeling, International Relations/Trade, F13, F14, Q17, Q18,
    Date: 2015
  5. By: Marcelo Veracierto (Federal Reserve Bank of Chicago)
    Abstract: I consider a real business cycle model in which agents have private information about an idiosyncratic shock to their value of leisure. I consider the mechanism design problem for this economy and describe a computational method to solve it. This is an important contribution of the paper since the method could be used to solve a wide class of models with heterogeneous agents and aggregate uncertainty. Calibrating the model to U.S. data I find a striking result: That the information frictions that plague the economy have no effects on business cycle fluctuations.
    Date: 2015

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