nep-cmp New Economics Papers
on Computational Economics
Issue of 2016‒03‒06
nine papers chosen by
Stan Miles
Thompson Rivers University

  1. Impact of Activity Tax in the Property-Owning and Subletting of Fixed Property Sectors on the South African Economy: A CGE Analysis By Lumengo Bonga-Bonga; Jean Luc Erero; Rangan Gupta
  2. Climate policy modeling: An online SCI-E and SSCI based literature review By Yi-Ming Wei; Zhi-Fu Mi; Zhiming Huang
  3. The 2015 Power Trading Agent Competition By Ketter, W.; Collins, J.; Reddy, P.; Weerdt, M.M.
  4. Layoff taxes, unemployment insurance, and business cycle fluctuations By Ahrens, Steffen; Nejati, Nooshin; Pfeiffer, Philipp L.
  5. Emergency Medical Service System Design under Service Level Constraints for Heterogeneous Patients By Jayaswal, Sachin
  6. Insularity and the development of a local network: a simulation model applied to the Italian railway system By L. Cocco; F. Cerina; M. Marchesi; K. Mannaro; F. Pigliaru
  7. Basel III capital surcharges for G-SIBs fail to control systemic risk and can cause pro-cyclical side effects By Sebastian Poledna; Olaf Bochmann; Stefan Thurner
  8. Custo econômico da energia em Minas Gerais: impacto das elevações de tarifas entre 2011 e 2015 By Kênia Barreiro de Souza; Edson Paulo Domingues; Aline Souza Magalhães; Terciane Sabadini Carvalho
  9. Tariff-mediated network effects with incompletely informed consumers By Muck, Johannes

  1. By: Lumengo Bonga-Bonga (Faculty of Economic and Financial Sciences, University of Johannesburg); Jean Luc Erero (South African Revenue Service and Faculty of Economic and Financial Sciences, University of Johannesburg); Rangan Gupta (Department of Economics, University of Pretoria)
    Abstract: This paper analyses the economy-wide impact of an increase in property tax in South Africa by disaggregating the real property sector into two subcomponents, namely the property-owning and subletting of fixed property sectors. Use is made of the Computable General Equilibrium model for this end. The results of the simulation show that increasing taxation in the property sector reduces demand for all types of labour in South Africa. Moreover, the results of the simulations show that a tax increase in the property sector reduces economic activity in the country and offsets a possible increase in government revenue. This paper suggests that the South African government should be cautious about resorting to an increase in tax in the property sector to raise its revenue.
    Date: 2016–02
  2. By: Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology); Zhi-Fu Mi; Zhiming Huang
    Abstract: This study utilizes the bibliometric method on climate policy modeling based on the online version of SCI-E from 1981 to 2013 and SSCI from 2002 to 2013, and summarizes several important research topics and methodologies in the field. Publications referring to climate policy modeling are assessed with respect to quantities, disciplines, most productive authors and institutes, and citations. Synthetic analysis of keyword frequency reveals six important research topics in climate policy modeling which are summarized and analyzed. The six topics include integrated assessment of climate policies, uncertainty in climate change, equity across time and space, endogeneity of technological change, greenhouse gases abatement mechanism, and enterprise risk in climate policy models. Additionally, twelve types of models employed in climate policy modeling are discussed. The most widely utilized climate policy models are optimization models, computable general equilibrium (CGE) models, and simulation models.
    Keywords: Climate policy, Integrated assessment, Enterprise risk, Bibliometric, Word frequency analysis
    JEL: Q40 Q54 Q58
    Date: 2014–06
  3. By: Ketter, W.; Collins, J.; Reddy, P.; Weerdt, M.M.
    Abstract: This is the specification for the Power Trading Agent Competition for 2015 (Power TAC 2015). Power TAC is a competitive simulation that models a “liberalized” retail electrical energy market, where competing business entities or “brokers” offer energy services to customers through tariff contracts, and must then serve those customers by trading in a wholesale market. Brokers are challenged to maximize their profits by buying and selling energy in the wholesale and retail markets, subject to fixed costs and constraints. Costs include fees for publication and withdrawal of tariffs, and distribution fees for transporting energy to their contracted customers. Costs are also incurred whenever there is an imbalance between a broker’s total contracted energy supply and demand within a given time slot. The simulation environment models a wholesale market, a regulated distribution utility, and a population of energy customers, situated in a real location on Earth during a specific period for which weather data is available. The wholesale market is a relatively simple call market, similar to many existing wholesale electric power markets, such as Nord Pool in Scandinavia or FERC markets in North America, but unlike the FERC markets we are modeling a single region, and therefore we model locational-marginal pricing through a simple manipulation of the wholesale supply curve. Customer models include households, electric vehicles, and a variety of commercial and industrial entities, many of which have production capacity such as solar panels or wind turbines. All have “real-time” metering to support allocation of their hourly supply and demand to their subscribed brokers, and all are approximate utility maximizers with respect to tariff selection, although the factors making up their utility functions may include aversion to change and complexity that can retard uptake of marginally better tariff offers. The distribution utility models the regulated natural monopoly that owns the regional distribution network, and is responsible for maintenance of its infrastructure. Real-time balancing of supply and demand is managed by a market-based mechanism that uses economic incentives to encourage brokers to achieve balance within their portfolios of tariff subscribers and wholesale market positions, in the face of stochastic customer behaviors and weather-dependent renewable energy sources. The broker with the highest bank balance at the end of the simulation wins.
    Keywords: autonomous agents, electric commerce, energy, preferences, portfolio management, power, policy guidance, sustainability, trading agent competition
    Date: 2015–02–03
  4. By: Ahrens, Steffen; Nejati, Nooshin; Pfeiffer, Philipp L.
    Abstract: This paper studies the role of labor market institutions in business cycle fluctuations. We develop a DSGE model with search and matching frictions and incorporate a US unemployment insurance experience rating system. Layoff taxes based on experience rating finance the cost of unemployment benefits and create considerable employment adjustment costs. Our framework helps realign the search and matching model with the empirical properties of its most salient variables. The model reproduces the negative correlation between vacancies and unemployment, i.e., the Beveridge curve. Simulations show that the model generates more cyclical volatility in its key variable - the ratio of job vacancies to unemployment (labor market tightness). Moreover, layoff taxes reduce the excess sensitivity of job destruction found in Krause and Lubik (2007) and strengthen the negative correlation of job creation and job destruction. Thus, the model matches key labor market data while incorporating an important feature of the US labor market.
    Keywords: search and matching,experience rating,unemployment insurance,Beveridge curve
    JEL: E24 J64 J65
    Date: 2015
  5. 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.
  6. By: L. Cocco; F. Cerina; M. Marchesi; K. Mannaro; F. Pigliaru
    Abstract: A network on an island only serves the territory in which it is located, while on a mainland region the same network would also serve other regions. This paper quantitatively assesses this effect through a model which simulates the construction of a railway network in Italy. The negative effect of land discontinuity on the development of an insular railway network is found to be quite strong - while the railway lines located in the island of Sardinia are the least profitable under the factual scenario, their relative profitability is significantly boosted in every counterfactual scenario where land discontinuity is artificially removed.
    Keywords: Simulation Modeling, Railway networks, Insularity, Graph Theory
    JEL: R41 C63
    Date: 2015
  7. By: Sebastian Poledna; Olaf Bochmann; Stefan Thurner
    Abstract: In addition to constraining bilateral exposures of financial institutions, there are essentially two options for future financial regulation of systemic risk (SR): First, financial regulation could attempt to reduce the financial fragility of global or domestic systemically important financial institutions (G-SIBs or D-SIBs), as for instance proposed in Basel III. Second, future financial regulation could attempt strengthening the financial system as a whole. This can be achieved by re-shaping the topology of financial networks. We use an agent-based model (ABM) of a financial system and the real economy to study and compare the consequences of these two options. By conducting three "computer experiments" with the ABM we find that re-shaping financial networks is more effective and efficient than reducing leverage. Capital surcharges for G-SIBs can reduce SR, but must be larger than those specified in Basel III in order to have a measurable impact. This can cause a loss of efficiency. Basel III capital surcharges for G-SIBs can have pro-cyclical side effects.
    Date: 2016–02
  8. By: Kênia Barreiro de Souza (Cedeplar-UFMG); Edson Paulo Domingues (Cedeplar-UFMG); Aline Souza Magalhães (Cedeplar-UFMG); Terciane Sabadini Carvalho (PPGDE/UFPR)
    Abstract: The first half of 2015 was marked by significant increases in electricity prices as a result of problems of hydro generation and the consequent use of thermal generation in energy supply. In this context, this paper aims to study the economic impacts of changes in the electricity prices in Minas Gerais, identifying the role of price changes by category of consumption. To do this, we have used a computable general equilibrium model, specially tailored for this analysis. When analyzing the sectoral impact of energy prices, the results allow us to identify elements that can subsidize energy pricing policies in Minas Gerais. The results indicate that indirect effects of energy prices on the economy can be more harmful than the effects of the price increase on residential energy consumption. Thus, price adjustments toward the final consumption tend to be less negative than the energy price increases on productive sectors, especially in industry.
    Keywords: Energy, Minas Gerais, Prices, Computable General Equilibrium Model
    JEL: Q40 C68 R13
    Date: 2015–12
  9. By: Muck, Johannes
    Abstract: I explore the competitive effects of on-net/off-net differentiation in a market with two asymmetric networks by combining the literature on on-net/off-net differentiation with research on costly consumer search in an agent-based simulation model. All consumers in the market are subscribed to one of two networks, whereby, initially, clusters of subscribers to network B exist. A priori, consumers lack information on the market shares of both network and, hence, have to engage in costly fixed-sample search. With respect to the extent of search costs, I distinguish between three types of consumers: (1) fully informed consumers (FICs) have non-positive search costs and, accordingly, are always perfectly informed about networks' market shares; (2) partly informed consumers (PICs) have moderate search costs, which allow them to observe market shares within a circular sensing field; and (3) locally informed consumers (LICs) have high search costs and, hence, only observe market shares among their immediate eight neighbours. Irrespective of their type, consumers maximize their expected utility by subscribing to the network offering the lowest expected cost for a call to a random consumer. The results of a systematic variation of the key parameters of the model show that the larger network's probability to increase its market share or to corner the market is negatively affected by the fraction of PICs and LICs, whereas it is positively affected by PICs's sensing radius, the larger network's initial market share, and the number of clusters. The introduction of calling clubs reveals that the probability of calling a friend inflicts a negative effect while the size of the calling clubs has a positive effect. These findings highlight the pivotal role of the amount of information available to consumers for the distribution of market shares.
    Keywords: on-net/off-net differentiation,tariff-mediated network effects,agent-based computational economics,search costs
    JEL: C63 D83 K23 L14 L96
    Date: 2016

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