Aggregate Quantities Research Articles

Machine-learned patterns suggest that diversification drives economic development.

We combine a sequence of machine-learning techniques, together called Principal Smooth-Dynamics Analysis (PriSDA), to identify patterns in the dynamics of complex systems. Here, we deploy this method on the task of automating the development of new theory of economic growth. Traditionally, economic growth is modelled with a few aggregate quantities derived from simplified theoretical models. PriSDA, by contrast, identifies important quantities. Applied to 55 years of data on countries' exports, PriSDA finds that what most distinguishes countries' export baskets is their diversity, with extra weight assigned to more sophisticated products. The weights are consistent with previous measures of product complexity. The second dimension of variation is proficiency in machinery relative to agriculture. PriSDA then infers the dynamics of these two quantities and of per capita income. The inferred model predicts that diversification drives growth in income, that diversified middle-income countries will grow the fastest, and that countries will converge onto intermediate levels of income and specialization. PriSDA is generalizable and may illuminate dynamics of elusive quantities such as diversity and complexity in other natural and social systems.

A Hybrid Simulation Approach to Modelling the Impact of Public Interventions on Poverty

Purpose: The aim of the article is to present the concept of a hybrid simulation model to study the impact of public intervention on the level of poverty at the local, regional and national levels. Design/Methodology/Approach: The proposed model is the hybrid of two computer simulation methods Agent-Based Simulation (ABS) and System Dynamics (SD). Findings: Counteracting the phenomenon of poverty is one of the tasks of public administration units. Various tools and instruments can be used to fight poverty, as a part of numerous programs financed from public funds, but their implementation should be preceded by a thorough analysis of the effects arising after their application. This is not easy, because the phenomenon of poverty is very complex, it results from the arrangement of many interrelated elements, and the outcomes of actions are visible only after a longer period of time. This system is characterized by the heterogeneity of elements. Some of them are on a macro scale (e.g. GDP level, labour market), while others refer to the micro scale (e.g. households and their members). Building a model of households requires the use of a method that allows to reflect the behaviour and decision-making rules of individuals and the interaction between them in a disaggregated form. Agent-Based Simulation (ABS) is such a method. On the other hand, modelling elements occurring in the macro scale, where we usually deal with aggregate quantities, is best matched by System Dynamics (SD) simulation method, which allows for reflecting dynamic behaviour through feedback loops. Practical Implications: The proposed concept can be used both by public administration units at various levels as well as by scientists - to conduct socio-economic research. Originality/Value: The applied simulation approach allows to capture the interrelations between the modelled effects in a dynamic manner for a long-time horizon, which is extremely important in the case of public management activities.

Modeling left ventricular dynamics with characteristic deformation modes

A computationally efficient method is described for simulating the dynamics of the left ventricle (LV) in three dimensions. LV motion is represented as a combination of a limited number of deformation modes, chosen to represent observed cardiac motions while conserving volume in the LV wall. The contribution of each mode to wall motion is determined by a corresponding time-dependent deformation variable. The principle of virtual work is applied to these deformation variables, yielding a system of ordinary differential equations for LV dynamics, including effects of muscle fiber orientations, active and passive stresses, and surface tractions. Passive stress is governed by a transversely isotropic elastic model. Active stress acts in the fiber direction and incorporates length–tension and force–velocity properties of cardiac muscle. Preload and afterload are represented by lumped vascular models. The variational equations and their numerical solutions are verified by comparison to analytic solutions of the strong form equations. Deformation modes are constructed using Fourier series with an arbitrary number of terms. Greater numbers of deformation modes increase deformable model resolution but at increased computational cost. Simulations of normal LV motion throughout the cardiac cycle are presented using models with 8, 23, or 46 deformation modes. Aggregate quantities that describe LV function vary little as the number of deformation modes is increased. Spatial distributions of stress and strain change as more deformation modes are included, but overall patterns are conserved. This approach yields three-dimensional simulations of the cardiac cycle on a clinically relevant time-scale.

Discretionary monetary and fiscal policy with endogenous sovereign risk

How does the presence of sovereign risk affect the conduct of public policy? To answer this question, this paper studies optimal monetary and fiscal policy without commitment for a model economy with nominal public debt and strategic sovereign default. Compared to an economy without the possibility of default, economies with sovereign risk experience more volatile interest rates, which impedes the government’s ability to smooth tax rates across states. Risk of default also limits public debt accumulation, reducing the government’s incentive to use surprise inflation on average. When calibrated to the United States, the model predicts that a counterfactual increase in the average annual default probability from 0 to 1% lowers average inflation by 33%, raises the standard deviation of inflation by 18% and increases the standard deviation of the labor income tax by 73%. The transmission of exogenous shocks to real aggregate quantities is however almost unaffected by the possibility of default. For example, the presence of sovereign risk would increase the standard deviation of log real GDP by less than 1% in the experiment above. Similarly, the welfare consequences of sovereign risk are found to be of negligible size as well.

The Improvement of Thermal Insulating Concrete Panel

The Iraqi houses flattening the roof by a concrete panel, and because of the panels on the top directly exposed to the solar radiation become unbearably hot and cold during the summer and winter. The traditional concrete panel components are cement, sand, and aggregate, which have a poor thermal property. The usage of materials with low thermal conductivity with no negative reflects on its mechanical properties gives good improvements to the thermal properties of the concrete panel. The practical part of this work was built on a multi-stage mixing plan. In the first stage the mixing ratio based on the ratios of the sand to cement. The second stage mixing ratios based on replacing the coarse aggregate quantities with the Alabaster aggregates, and the third stage the mixing ratios based on the replacement of wood ash instead of the sand. While the fourth stage mixing ratios based on decreasing the thermal conductivity and increasing mechanical properties by adding a multilayer of a plastic net. The result shows that using a concrete panel with components (cement, sand, coarse aggregate, wood ash, and Alabaster aggregates) with a mass ratio of (1:1:2:1:1) and 3-plastic layers, gives the best improvement of the thermal properties. Where, the thermal conductivity is reduced by 42% and the specific heat increased by 41.2% as compared to the traditional concrete panel mixing ratio, with mechanical properties are agreed with the Iraqi standards.

Urban scaling and the geographic concentration of inequalities by city size

Urban scaling laws summarise how socio-economic behaviours of urban systems may be predicted from city size. While most scaling analysis rests on using aggregate quantities (total incomes, GDP, etc.), examining distributions of these aggregate quantities (e.g. income distributions) could shed light on how socio-economic inequalities may correlate or be causally linked to city size. In this direction, this paper examines how geographic distributions and spatial inequalities of income and housing costs vary by city size. The paper presents three principal results. First, it brings out qualitative implications of quantitative scaling by relating scaling of the distributions of income and housing costs to their specific geographic concentrations. Second, it shows that some small and medium sized cities are clear outliers, showing behaviour similar to the largest cities and starkly different from the behaviours of the bulk of small and medium sized cities. Third, this above observation explains why heteroscedasticity, or large and heterogeneous fluctuations, are frequently observed in urban indicator data when plotted as a function of city size. Putting together these three results, overall, it is shown that income distributions and housing costs scale and concentrate in cities by size in a predictable way, where the largest cities superlinearly/disproportionately agglomerate the highest income earners and the highest housing costs, and show relatively lower concentrations of low-middle income earners and low-medium housing costs. In contrast, most of the smaller and medium sized cities show a ‘flipped’ opposite trend. A few small and medium sized cities are outliers: they show trends that match those of the largest cities, due to specialisations of economic functions or concentrations of high-paying occupations in these cities. The empirical findings lead to a discussion on the objective and normative relationships between city size and urban inequalities. It is suggested that due to the concentrations of high income and high housing costs, largest cities may have a resulting housing market structure that will push out lower and medium income earners, thereby making affordability, diversity, and socio-spatial justice emerge as important urban policy issues.

Study of ravelling failure on dense graded asphalt pavement

Ravelling is the loss of bond between aggregates and asphalt binder. This distress is more common in porous asphalt concrete when the voids content is 20% or more. However, premature pavement failure in terms of ravelling on a dense graded asphalt concrete pavement in China occurred within 3 years after the pavement was opened to traffic. The objective of this paper is to determine the cause of this distress. A preliminary investigation did not find evidence of either inadequate design- or construction-related issues. Detailed investigations were undertaken to identify the possible cause of failures. Cores and material samples were also tested in the laboratory. The results indicated that the asphalt mixture at this section fully met the specified requirements of a conventional mixture. The adhesions between binder and aggregate also met the specified requirements and the air void content of the mixture was 5·3%. X-ray diffraction indicated that some aggregates contained illite and kaolinite, which are expansive clays. It was found that this was the primary reason for the distress. Although selection of proper aggregate materials and quantities is standard practice, there is a need to include requirements for contamination by weathered products in the crushed stone.

Norm method to define and evaluate robustness of self-compacting concrete due to component quantity variations

Presently, self-compacting concrete (SCC) has been widely used and has many incomparable advantages compared to the traditional vibrated concrete. While it also has many disadvantages among which the robustness of SCC seems to be a serious problem at the production stage. In this study, both the fresh and hardened properties of a low binder content SCC were studied in the cases of the quantity variations of components. Meanwhile, a new robustness assessment method based on the concepts of linear algebra (using norm analysis of vectors) was proposed in order to define and evaluate the robustness of SCC. The results show that the robustness of the hardened properties is higher than that of the fresh-related properties. Additionally, by adopting the proposed method, the robustness of the SCC mixtures can be described and evaluated in a more intuitive way and both the variations of moisture content and aggregate quantities, such as the volume fraction and the gradation, strongly affect the fresh properties of the low-binder SCC. Finally, a good consistency was found between the proposed method and a previous robustness evaluation method thus proving that the proposed methods can be regarded as a concise and effective tool to define and evaluate the robustness of the SCC mixtures.

Habit Formation Heterogeneity: Implications for Aggregate Asset Pricing

Nous résolvons explicitement dans cet article le problème d’évaluation des prix agrégés des actifs dans une économie à la Lucas, en équilibre général et à temps discret, où deux agents ont des préférences différentes en terme d’aversion au risque et de sensibilité à la modification de leurs habitudes additives. On distingue même, sur ce dernier point, la dimension interne – la persévérance des habitudes, de la dimension externe à savoir la tendance à rivaliser avec ses voisins. Pour résoudre le modèle, nous généralisons l’algorithme de Dumas et Lyasoff (2012) de manière à prendre en compte des préférences intertemporelles non séparables. Nos résultats numériques montrent que la dimension interne des habitudes contribue plus que la dimension externe à expliquer les valeurs observées historiquement de la prime de risque action aux États-Unis, de la volatilité des actions américaines, du ratio de Sharpe et enfin du niveau et de la volatilité du taux d’intérêt sans risque.

Quantifying Disaster Physical Damage Using Remote Sensing Data\u2014A Technical Work Flow and Case Study of the 2014 Ludian Earthquake in China

Disaster damage assessment is an important basis for the objective assessment of the social impacts of disasters and for the planning of recovery and reconstruction. It is also an important research field with regard to disaster mitigation and risk management. Quantitative assessment of physical damage refers to the determination of the physical damage state of the exposed elements in a disaster area, reflecting the aggregate quantities of damages. It plays a key role in the comprehensive damage assessment of major natural hazard-induced disasters. The National Disaster Reduction Center of China has established a technical work flow for the quantitative assessment of disaster physical damage using remote sensing data. This article presents a quantitative assessment index system and method that can be integrated with high-resolution remote sensing data, basic geographical data, and field survey data. Following the 2014 Ludian Earthquake in Yunnan Province, China, this work flow was used to assess the damage to buildings, roads, and agricultural and forest resources, and the assessment results were incorporated into the Disaster Damage Comprehensive Assessment Report of the 2014 Ludian Earthquake for the State Council of China. This article also outlines some possible improvements that can be addressed in future work.

Are vessel sharing agreements pro-competitive?

Attention is focussed on a type of strategic alliance of the container shipping industry: vessel sharing agreements. In such consortia carriers jointly provide—but independently sell—a liner service. The strategic alliances studied in this work have not been extensively analyzed in the theoretical literature; a new model is proposed that embodies their main distinguishing features. By it, an examination is provided of the effects on equilibrium prices, equilibrium aggregate quantities and consumer welfare of the formation and enlargement of vessel sharing agreements. A positive answer is developed to the question raised in the title of the present work that supports a laissez-faire policy for these consortia.

The dynamics of leverage in a demand-driven model with heterogeneous firms

This paper introduces heterogeneous microeconomic behavior into a demand-driven macroeconomic model in order to study the joint dynamics of leverage and capital accumulation. By identifying the links between firm level variables and aggregate quantities, the paper contributes toward a reformulation of the Minskyan formal analysis that explicitly considers the role of microeconomic factors in generating macroeconomic instability. The aggregation of heterogeneous agents is not only performed numerically, as in traditional agent-based models, but also by means of an innovative analytical methodology, originally developed in statistical mechanics and recently imported into macroeconomics. The distinctive feature is in that the joint analysis of the numerical and analytical solutions of the model sheds light on the effects of financial fragility at the firm level on the dynamics of the macroeconomy. In particular, the analysis of steady-state and stability properties of the system provide additional insights on the role of behavioral and size heterogeneity of firms for the stocks of aggregate debt and capital.

Downscaling heterogeneous household outcomes in dynamic CGE models for energy-economic analysis

Downscaling methods for dynamic computable general equilibrium models are developed and analyzed. The methods produce outcomes for a variety of different household types by downscaling the aggregate quantities from an economic growth model with a representative household. This approach uses household survey data and long-term population projections for different household types to compare the performance of the downscaling methods vs. a general equilibrium model with multiple household groups under a variety of conditions, including demographic change, technological change, and a carbon tax. Both recursive-dynamic and forward-looking downscaling methods produce results that approximate well a multiple household model run. The recursive-dynamic downscaling method is applied to an illustrative example estimating impacts of a carbon tax on aggregate CO2 emissions and the energy demand of different household groups for a middle of the road development scenario.

Are Vessel Sharing Agreements Pro-Competitive?

Abstract Attention is focussed on a type of strategic alliance of the container shipping industry: vessel sharing agreements. In such consortia carriers jointly provide—but independently sell—a liner service. The strategic alliances studied in this work have not been extensively analyzed in the theoretical literature; a new model is proposed that embodies their main distinguishing features. By it, an examination is provided of the effects on equilibrium prices, equilibrium aggregate quantities and consumer welfare of the formation and enlargement of vessel sharing agreements. A positive answer is developed to the question raised in the title of the present work that supports a laissez-faire policy for these consortia.

Bad news in the Great Depression, the Great Recession, and other U.S. recessions: A comparative study

In economic recessions consumption usually drops in tandem with other aggregate quantities as output or employment. Following the permanent income hypothesis, these drops can be rationalized by the idea that consumers have pessimistic views about their long-run income. Using a standard signal-extraction model, we show that this pessimism can be due either to a persistent fall of aggregate productivity before and during the recession (signaling a future decline of income), or to other negative information unrelated to contemporaneous fundamentals, which we label “bad news”. We classify U.S. recessions (from 1919 to 2015) according to a (bad) news index reflecting this negative information. We find that both the Great Depression and the Great Recession score highest in this index. The index is such that we can rule out that this is due merely to the length or the depth of these recessions. Instead, these two recessions are similar in that both were aggravated by a wave of pessimism about future income which cannot be related to contemporaneous fundamentals.

Do Individual Behavioral Biases Affect Financial Markets and the Macroeconomy?

A common criticism of behavioral economics is that it has not shown that the psychological biases of individual investors lead to aggregate long-run effects on both asset prices and macroeconomic quantities. Our objective is to address this criticism by providing a simple example of a production economy where individual portfolio biases cancel when summed across investors, but still have an effect on aggregate quantities that does not vanish in the long-run. Specifically, we solve in closed form a model of a stochastic general-equilibrium production economy with a large number of heterogeneous firms and investors. Investors in our model are averse to ambiguity and so hold portfolios biased toward familiar assets. We specify this bias to be unsystematic so it cancels out when aggregated across investors. However, because of holding under-diversified portfolios, investors bear more risk than necessary, which distorts the consumption of all investors in the same direction. Hence, distortions in consumption do not cancel out in the aggregate and therefore increase the price of risk and distort aggregate investment and growth. The increased risk from holding biased portfolios, which increases the demand for the risk-free asset, leading to a higher equity risk premium and a lower risk-free rate that match the values observed empirically. Furthermore, all investors survive in the long-run, and so the effects of their biases never vanish. Our analysis illustrates that idiosyncratic behavioral biases can have long-run distortionary effects on both financial markets and the macro-economy.

Asymmetries in Earnings, Employment and Wage Risk in Great Britain

This paper examines the relationship between idiosyncratic risk in labour income and fluctuations in aggregate labour market quantities for Great Britain. We use data from the British Household Panel Survey (BHPS) for 1991-2008 and from the BHPS sub-sample of Understanding Society for 2010-2014. We measure idiosyncratic risk in labour income by the relevant moments of the distributions of earnings, employment and wage shocks across individuals. Our main finding is that idiosyncratic risk increases during contractions in the labour market. Furthermore, we find evidence of insurance, both at the household level and in the form of public insurance. However, private and public insurance mechanisms against an increase in idiosyncratic risk are less e¤ective for households whose head does not hold a University degree.

The Macroeconomic Shock with the Highest Price of Risk

I propose a new method of constructing a macroeconomic shock based on its ability to explain the cross-section of asset returns. The only identifying assumption is that this λ-shock demands the highest risk price per unit of exposure, or equivalently, minimises the associated sum of squared pricing errors, when pricing a given asset portfolio. When applying the method to the stock portfolios studied by Fama-French, a robust economic feature of the λ-shock is the delayed effect on aggregate quantities such as output and consumption and a sharp impact on the short-term interest rate and the term spread. The estimated λ-shock bears strong resemblance both with monetary policy shocks and with technology news shocks studied by the macroeconomic literature.

Asset Prices in Production Economies with an Endogenous Extensive Margin

In economies that exhibit love-for-variety either in preferences or technology, the official consumer price index differs from the welfare-based price aggregator. This wedge implies that the stochastic discount factor should be adjusted to account for changes in the range of goods. This paper shows that a real business cycle model with endogenous entry fits aggregate quantities while featuring a higher risk premium when changes in growth variety are properly accounted. Moreover, adding the growth rate of establishments, as a proxy for growth variety, helps the standard consumption-based model to deliver lower pricing errors for the cross-section of stock returns.

Optical properties of the semi-external mixture composed of sulfate particle and different quantities of soot aggregates

The effects of soot aggregate quantities on the optical properties of their semi-external mixture with sulfate host particle were investigated. In this study, the individual soot-containing mixtures were simulated as sulfate host point-contact attached to a specified amount of soot aggregates with the same monomer numbers and fractal parameters. The total numbers and volumes of soot monomers were also constant. Optical properties of this type of aerosol mixture were calculated using the numerically exact superposition T-matrix method (STM). The random-orientation averaging results indicated that the optical properties of the soot-containing mixtures may be influenced by the soot aggregate quantities. In these simulations, the absorption Ångström exponent (AÅE) values ranged from 0.9 to 1.1, which agree with the observations. The relative deviations of scattering Ångström exponent (SÅE) values between different numbers of soot aggregates attached to the surface of a sulfate host were upwards of ~11%. The results showed that the greater number of attached soot aggregates may lead to smaller SÅE values in the soot-containing mixtures. For most cases of simulated mixtures, a more compact morphology of soot aggregates, larger soot monomer radii and smaller soot volume fractions (Fsoot) may also generate smaller SÅE values. Moreover, in the visible range, the simulated scattering cross sections of soot-containing mixtures with two, three, four, and six soot aggregates (Df=1.8) were ~5%, ~10%, ~15%, and ~30% larger than those with only one soot aggregate, respectively, on the condition that volumes of soot and sulfate are comparable. However, these relative deviations between different numbers of attached soot aggregates on the scattering cross sections of mixtures may be weakened for larger volume of non-absorbing sulfate particle (<5% for the cases of Fsoot=1/10, sulfate volume is 9 times of soot).