Dynamic Economic Model Research Articles

Corruption, Poverty, and Economic Growth Relationship in the Nigerian Economy

This study examined the causality relationship between corruption and poverty by adding economic growth in Nigeria using data from 1970 to 2011. VECM with co-integration test was employed to test the causality. The results indicate a long run relationship between corruption, economic growth and poverty in Nigeria. Evidence from the dynamic economic growth model has established the linkage of growth influence on corruption. Therefore, our findings strongly supported a significant reduction in corruption through the institutional good governance approach. Also, there was significant improvement in GDP growth within the study period. Therefore, findings of the study recommend government to give emphasis on the development of critical sectors that are growth enhancing in the short and medium term.

Smolyak method for solving dynamic economic models: Lagrange interpolation, anisotropic grid and adaptive domain

We show how to enhance the performance of a Smolyak method for solving dynamic economic models. First, we propose a more efficient implementation of the Smolyak method for interpolation, namely, we show how to avoid costly evaluations of repeated basis functions in the conventional Smolyak formula. Second, we extend the Smolyak method to include anisotropic constructions that allow us to target higher quality of approximation in some dimensions than in others. Third, we show how to effectively adapt the Smolyak hypercube to a solution domain of a given economic model. Finally, we argue that in large-scale economic applications, a solution algorithm based on Smolyak interpolation has substantially lower expense when it uses derivative-free fixed-point iteration instead of standard time iteration. In the context of one- and multi-agent optimal growth models, we find that the proposed modifications to the conventional Smolyak method lead to substantial increases in accuracy and speed.

Agreeable solutions of discrete time optimal control problems

In this paper we study solutions of an infinite horizon discrete-time optimal control problem with a compact metric space of states which arises in economic dynamics. We consider locally maximal solutions whose prototypes were introduced and used for models of solid-state physics and in the theory of thermodynamical equilibrium for materials, good solutions and agreeable solutions which were introduced for models of economic dynamics. We show that if an objective function possesses an asymptotic turnpike property, then an admissible program is agreeable if and only if it is locally maximal and good.

„Silny” efekt magistrali w modelu dynamiki ekonomicznej typu Gale’a. Zagadnienie wzrostu docelowego

This paper, in reference to articles Panek (2003) chapt. 5 and Panek, Runka (2011) presents proof of the “strong” turnpike effect in the Gale – type economic dynamic model, assuming that the production processes efficiency in the economy is the lower the more the investment structure in such processes differs from the optimum.

Income and Wealth Distribution with Physical and Human Capital Accumulation: Extending the Uzawa-Lucas Model to a Heterogeneous Households Economy

This paper proposes a dynamic economic model with wealth accumulation and human capital accumulation with endogenous education. In addition to learning by education like in the Uzawa-Lucas model, we also consider Arrow’s learning by producing and Zhang’s learning by consuming (creative learning) in the human capital accumulation equation. We simulate the model to demonstrate the existence of equilibrium points and motion of the dynamic system. We also examine how ef fects of changes in the propensity to receive education, the population, the propensity to save, and the education sector’s total productivity will alter the paths of the economic dynamics.

The National One Week Prevalence Audit of Universal Meticillin-Resistant Staphylococcus aureus (MRSA) Admission Screening 2012

IntroductionThe English Department of Health introduced universal MRSA screening of admissions to English hospitals in 2010. It commissioned a national audit to review implementation, impact on patient management, admission prevalence and extra yield of MRSA identified compared to “high-risk” specialty or “checklist-activated” screening (CLAS) of patients with MRSA risk factors.MethodsNational audit May 2011. Questionnaires to infection control teams in all English NHS acute trusts, requesting number patients admitted and screened, new or previously known MRSA; MRSA point prevalence; screening and isolation policies; individual risk factors and patient management for all new MRSA patients and random sample of negatives.Results144/167 (86.2%) trusts responded. Individual patient data for 760 new MRSA patients and 951 negatives. 61% of emergency admissions (median 67.3%), 81% (median 59.4%) electives and 47% (median 41.4%) day-cases were screened. MRSA admission prevalence: 1% (median 0.9%) emergencies, 0.6% (median 0.4%) electives, 0.4% (median 0%) day-cases. Approximately 50% all MRSA identified was new. Inpatient MRSA point prevalence: 3.3% (median 2.9%). 104 (77%) trusts pre-emptively isolated patients with previous MRSA, 63 (35%) pre-emptively isolated admissions to “high-risk” specialties; 7 (5%) used PCR routinely. Mean time to MRSA positive result: 2.87 days (±1.33); 37% (219/596) newly identified MRSA patients discharged before result available; 55% remainder (205/376) isolated post-result. In an average trust, CLAS would reduce screening by 50%, identifying 81% of all MRSA. “High risk” specialty screening would reduce screening by 89%, identifying 9% of MRSA.ConclusionsImplementation of universal screening was poor. Admission prevalence (new cases) was low. CLAS reduced screening effort for minor decreases in identification, but implementation may prove difficult. Cost effectiveness of this and other policies, awaits evaluation by transmission dynamic economic modelling, using data from this audit. Until then trusts should seek to improve implementation of current policy and use of isolation facilities.

A class of models describing the dynamics of production and infrastructure-planning indicators

A mathematical model is proposed for the dynamics of infrastructure indicators in an isolated region with a mining enterprise, based on the theory of multisector models of economic dynamics. We examine the time-dependent optimal control problem for the enterprise production cycle and for investments in the infrastructure sector, where the terminal performance functional requires maximizing the economic efficiency of both production and infrastructure. A numerical algorithm is proposed for the corresponding optimal control problem. Calculations of optimal control for test model parameters are reported.

Dynamic Economic Dispatch Considering Transmission Losses Using Quadratically Constrained Quadratic Program Method

In response to the challenges brought on by the energy conservation based generation dispatch (ECGD) in China, a dynamic economic dispatch model that considers transmission losses (DED-TL) and a new solution framework are proposed to improve the accuracy, efficiency, and robustness of generation scheduling. Transmission losses are presented explicitly in the model so that the total energy consumption, consisting of both the generators' operation costs and also the transmission losses, can be well considered. The model is formulated as a quadratically constrained quadratic program (QCQP) problem that can be solved by commercial solvers. A penalty-based algorithm is proposed to address the virtual transmission loss problem brought on by negative nodal marginal costs. Three cases-a 6-bus system, the IEEE 30-bus system, and a 2746-bus system based on the electric energy system of Poland-are employed in numerical experiments to demonstrate the effectiveness of the proposed method. The results show that the better scheduling results in higher accuracy, and that good computational efficiency can be acquired via the proposed method.

A network economic game theory model of a service-oriented internet with choices and quality competition

This paper develops a new dynamic network economic model of Cournot-Nash competition for a service-oriented Internet in the case of service differentiation and quality competition. Each service provider seeks to maximize its own profit by determining its service volumes and service quality. We utilize variational inequality theory for the formulation of the governing Nash equilibrium as well as for the computational approach. We then construct the projected dynamical systems model, which provides a continuous-time evolution of the service providers service volumes and service quality levels, and whose set of stationary points coincides with the set of solutions to the variational inequality problem. We recall stability analysis results using a monotonicity approach and construct a discrete-time version of the continuous-time adjustment process, which yields an algorithm, with closed form expressions at each iteration. The algorithm is then utilized to compute the solutions to several numerical examples. A sensitivity analysis is also conducted.

Identifying global competition and devising a biohydrogen roadmap on a continental level

This study elucidates how advances in biohydrogen production technology facilitate the development of biohydrogen and increase global competition. A dynamic economic model, the “Global Trade Analysis Project (Dynamic GTAP)”, forecasts the competition and roadmaps of biohydrogen development in Asia, Europe, Latin America, North America and Oceania. Biohydrogen appears to be a viable technology to generate hydrogen in Latin America and Oceania. The two continents will be the fastest ones to achieve the technology roadmap target before 2060. Development of biohydrogen in Europe and North America will slow down. Asia lags behind last in global competition in this sector. Results of this study provide a valuable reference for decision makers using possible biohydrogen roadmaps in continental levels to improve the likelihood of successfully transiting to a biohydrogen economy in national level.

O TRIPÉ INFLATION TARGETING, SUPERÁVITS PRIMÁRIOS E FLUTUAÇÃO CAMBIAL: ANÁLISE DE REGIMES ALTERNATIVOS SOB CHOQUES DE OFERTA E CAMBIAIS

A combinação de metas para inflação, superávits primários e flutuação cambial sob choques de oferta e cambiais pode criar efeitos deletérios para a dinâmica econômica. Este trabalho realiza experimentos computacionais de simulação através de um modelo dinâmico e estocástico capaz de receber diferentes restrições. Em geral, mostra-se que sob choques de oferta e cambiais um arranjo mais adequado inclui metas para inflação flexíveis, superávits primários contracíclicos e alguma forma de controle de capitais, sem que se impeça a flutuação cambial, como forma de minimizar as perdas sociais.

Integrating dynamic economic optimization and model predictive control for optimal operation of nonlinear process systems

In this work, we propose a conceptual framework for integrating dynamic economic optimization and model predictive control (MPC) for optimal operation of nonlinear process systems. First, we introduce the proposed two-layer integrated framework. The upper layer, consisting of an economic MPC (EMPC) system that receives state feedback and time-dependent economic information, computes economically optimal time-varying operating trajectories for the process by optimizing a time-dependent economic cost function over a finite prediction horizon subject to a nonlinear dynamic process model. The lower feedback control layer may utilize conventional MPC schemes or even classical control to compute feedback control actions that force the process state to track the time-varying operating trajectories computed by the upper layer EMPC. Such a framework takes advantage of the EMPC ability to compute optimal process time-varying operating policies using a dynamic process model instead of a steady-state model, and the incorporation of suitable constraints on the EMPC allows calculating operating process state trajectories that can be tracked by the control layer. Second, we prove practical closed-loop stability including an explicit characterization of the closed-loop stability region. Finally, we demonstrate through extensive simulations using a chemical process model that the proposed framework can both (1) achieve stability and (2) lead to improved economic closed-loop performance compared to real-time optimization (RTO) systems using steady-state models.

Heterogeneous Computing in Economics: A Simplified Approach

This paper shows the potential of heterogeneous computing in solving dynamic equilibrium models in economics. We illustrate the power and simplicity of C++ Accelerated Massive Parallelism (C++ AMP) recently introduced by Microsoft. Starting from the same exercise as Aldrich et al. (J Econ Dyn Control 35:386–393, 2011) we document a speed gain together with a simplified programming style that naturally enables parallelization.

An interdisciplinary regional groundwater model: A study of the Ogallala in the Texas High Plains

AbstractGroundwater research in the Texas High Plains (THP), where production agriculture depends on the Ogallala aquifer, has been conducted by economists, hydrologists and environmental scientists, each focusing on disciplinary aspects of water use, including conservation cost, level of conservation achieved, long‐term aquifer sustainability and water quality degradation. Due to paucity of data, economists often make stringent and unrealistic assumptions concerning the uniformity of aquifer characteristics, land use and water use practices. To address modelling sensitivity to the assumption that aquifer characteristics are homogeneous we develop an integrated regional water policy model for the THP that links a groundwater hydrology model with a dynamic economic optimization model. We compare baseline water use projections provided by a stand‐alone normative economic model to those provided by an integrated economic and hydrologic model that controls for spatial variability in aquifer characteristics. Findings suggest the stand‐alone economic model generally overstates baseline economic returns to water and the water use level compared to the integrated model. The integrated modelling framework controls for the impact spatially heterogeneous aquifer characteristics have on the optimal use of limited groundwater supplies. Improved county‐level estimates for expected baseline economic returns to, and water use by irrigated agriculture over time enhances the ability of water policy‐makers to more precisely model the economic cost and water savings of proposed water conservation policies because policy cost‐effectiveness is normally measured relative to the baseline condition.

Using Nonlinear Model Predictive Control for Dynamic Decision Problems In Economics

This paper presents a new approach to solve dynamic decision models in economics. The proposed procedure, called Nonlinear Model Predictive Control (NMPC), relies on the iterative solution of optimal control problems on finite time horizons and is well established in engineering applications for stabilization and tracking problems. Only quite recently, extensions to more general optimal control problems including those appearing in economic applications have been investigated. Like Dynamic Programming (DP), NMPC does not rely on linearization techniques but uses the full nonlinear model and in this sense provides a global solution to the problem. However, unlike DP, NMPC only computes one optimal trajectory at a time, thus avoids to grid the state space and for this reason the computational demand grows much more moderate than for DP. In this paper we explain the basic idea of NMPC together with some implementational details and illustrate its ability to solve dynamic decision problems in economics by means of numerical simulations for various examples, including stochastic problems, models with multiple equilibria and regime switches in the dynamics.

A synthesis of the Uzawa-Lucas model with the Walrasian-General-Equilibrium and Neoclassical-Growth theories

This paper proposes a dynamic economic model of wealth accumulation and human capital accumulation with endogenous education. It is an extension of the Uzawa-Lucas model of a heterogeneous household economy with multiple ways of human capital accumulation. In addition to learning by education in the Uzawa-Lucas model (Uzawa, 1965; Lucas, 1988), we also consider Arrow?s ?learning by producing? (Arrow, 1962) and Zhang?s ?learning by consuming? (creative learning, Zhang, 2007) in the human capital accumulation equation. The economic system consists of one production sector and one education sector. Households differ in propensity to save, to obtain education, to consume, and in learning abilities. The model describes a dynamic interdependence between wealth accumulation, human capital accumulation, and division of labour with endogenous wealth and income distribution in perfect competition. We simulate the model to demonstrate the existence of equilibrium points and the motion of the dynamic system. We also demonstrate how changes in the propensity to obtain education, the population, the propensity to save, and the education sector?s total productivity affect economic development.

Smolyak Method for Solving Dynamic Economic Models: Lagrange Interpolation, Anisotropic Grid and Adaptive Domain

First, we propose a more efficient implementation of the Smolyak method for interpolation, namely, we show how to avoid costly evaluations of repeated basis functions in the conventional Smolyak formula. Second, we extend the Smolyak method to include anisotropic constructions; this allows us to target higher quality of approximation in some dimensions than in others. Third, we show how to effectively adapt the Smolyak hypercube to a solution domain of a given economic model. Finally, we advocate the use of low-cost fixed-point iteration, instead of conventional time iteration. In the context of one- and multi-agent growth models, we find that the proposed techniques lead to substantial increases in accuracy and speed of a Smolyak-based projection method for solving dynamic economic models.

Scitovsky and the income-happiness paradox

The recent debate on happiness in economics has revived interest in Scitovsky's 1976 book The Joyless Economy, which aims at extending the concept of welfare, and explaining the income-happiness paradox, i.e. “why [American] unprecedented and fast-growing prosperity had left its beneficiaries unsatisfied.” A dynamic economic model will distil Scitovsky's proposal, which has not yet been integrated into conventional economics. It will show that people's dissatisfaction may be due to their excess of demand for ‘comfort’, which essentially requires consumption goods, and to their failure to adequately develop ‘leisure skill’, which is necessary to enjoy ‘creative activities’ during leisure time. Since comfort includes comparing consumption with that of others, Scitovsky also strengthened the conventional solution of the paradox.

DYNAMIC MODELING OF HIGH-DIMENSIONAL CORRELATION MATRICES IN FINANCE

A class of dynamic factor and dynamic panel models is proposed for daily high dimensional correlation matrices of asset returns. These flexible semiparametric predictors process ultra high frequency information and allow to exploit both realized correlation matrices and exogenous factors for forecasting purposes. The Fisher-z transformation offers the transmission from (factor and panel) time series models operating on unrestricted random variables to bounded correlation forecasts. Our methodology is contrasted with prominent alternative correlation models. Based on economic performance criteria dynamic factor models turn out to carry the highest predictive content.

Empirical Confirmation of Creative Destruction from World Trade Data

We show that world trade network datasets contain empirical evidence that the dynamics of innovation in the world economy indeed follows the concept of creative destruction, as proposed by J.A. Schumpeter more than half a century ago. National economies can be viewed as complex, evolving systems, driven by a stream of appearance and disappearance of goods and services. Products appear in bursts of creative cascades. We find that products systematically tend to co-appear, and that product appearances lead to massive disappearance events of existing products in the following years. The opposite–disappearances followed by periods of appearances–is not observed. This is an empirical validation of the dominance of cascading competitive replacement events on the scale of national economies, i.e., creative destruction. We find a tendency that more complex products drive out less complex ones, i.e., progress has a direction. Finally we show that the growth trajectory of a country’s product output diversity can be understood by a recently proposed evolutionary model of Schumpeterian economic dynamics.