Simple Equilibrium Research Articles

The role of global agricultural market integration in multiregional economic modeling: Using hindcast experiments to validate an Armington model

The representations of international trade and global market integration play central roles in long-term global agricultural economic modeling. However, the conventional use of the gravity models (i.e., the Armington approach) of trade may not adequately account for the dynamic process of market integration. In this paper, we generalize a logit-based Armington approach by permitting home preference bias erosion to account for a trend of global market integration. We build a simple agricultural economic equilibrium model and conduct hindcast experiments to examine the historical trend of market integration. The results show a significant integrating trend of the global agricultural market implied by converging Armington preference distributions (i.e., home bias erosion) in 1995–2015. We demonstrate important implications of allowing the dynamic trend of market integration implied by bias erosion on estimating trade elasticities. By testing the future market integration trend implied by historical home bias integration in the Global Change Analysis Model (GCAM), we show a high sensitivity of long-term agroeconomic projections to future trade and market integration scenarios.

Bilateral Trade and Productivity Differences in a Ricardo-Cournot Model

Purpose - Using a model that highlights Ricardian comparative advantage and Cournot competition, I derive theoretical predictions on how bilateral measures of trade intensity, specialization, and intraindustry are interrelated, and how Ricardian productivity differences affect these measures. We test the predictions using trade and production data, and confirm them. Design/methodology - A simple two-country general equilibrium model is constructed to derive theory-based bilateral indexes. We then test the relationships among them using panel data for 35 countries and 14 industries between 1996 and 2008. Findings - Bilateral trade intensity is increasing in specialization, as in the classical trade theory, and in intra-industry trade, as in the new trade theory. However, productivity differences positively affect specialization, and negatively affect intra-industry trade. These effects cancel each other; thus productivity differences have little impact on trade intensity. Originality/value - This paper provides a comprehensive conceptual framework for understanding the relationship among trade intensity, specialization, intra-industry trade, and productivity differences. We derive theory-consistent measures of specialization, intra-industry trade, and productivity differences. Moreover, we reevaluate the empirical relevance of these variables for the study of gravity equations. This paper is also an effort to capture oligopolistic competition in a general equilibrium framework, interests in which recently resurged.

Strong Tough Polyampholyte Hydrogels via the Synergistic Effect of Ionic and Metal–Ligand Bonds

AbstractDespite existing in biological systems, developing synthetic polyampholyte (PA) hydrogels constructed by both ionic and metal–ligand bonds remains challenging. Herein, a simple secondary equilibrium approach is proposed to fabricate strong and tough PA hydrogels via the synergy of ionic and metal–ligand bonds. The original PA gels (constructed by ionic bonds) are first dialyzed in multivalent metal‐ion solutions to reach a swelling equilibrium and then moved to deionized water to dialyze excess free ions to achieve a new equilibrium. Through this approach, the original PA gel network can be optimized and eventually constructed by ionic and metal–ligand bonds, enabling a synergistic reinforcement. By selecting different original PA gel systems and diverse multivalent metal‐ions, the proposed approach is proved to be generalizable to fabricate strong and tough PA gels. Additionally, the hydrogels have stable ion‐conductivity even at the water‐equilibrium state, making them promising as strain sensors. The viscoelastic and elastic contributions to the mechanical properties of the hydrogels by a viscoelastic model are also discussed to further understand the strengthening and toughening mechanisms. The proposed strategy is simple but effective for achieving strong and tough PA‐based hydrogels. This study also provides new insights for PA hydrogels in electrolyte environments.

Strategic deviations in optimal monetary policy

This paper investigates the circumstances under which a central bank is more or less likely to deviate from the optimal monetary policy rule. The research question is addressed in a simple New Keynesian dynamic stochastic general equilibrium (DSGE) model in which monetary policy deviations occur endogenously. The model solution suggests that higher future central bank credibility attenuates the current period policy trade-off between a stable inflation rate and a stable output gap. Together with the loss of credibility after a policy deviation, this provides the central bank with an incentive to implement past policy commitments. The result is valid even if the central bank may recover credibility with some probability after a policy deviation. My main finding is that the central bank is willing to implement past policy commitments if a sufficient fraction of agents is not aware of the exact end date of the policy commitment. The result challenges the time-inconsistency argument against monetary policy commitments and provides a potential explanation for the repeated implementation of monetary policy commitments in reality.

Geochemistry of kerogen type III transformations in the process of rocks diving according to the thermodynamic simulation results

The publication considers the processes that accompany the transformation of organic matter (OM), which is the basis of kerogens different types, are characterized by incredible complexity and predictable diversity. Here is a summary of the basic reactions that occur with the components of the biota after passing the biodegradation barrier: first destruction due to hydrolysis, and then - different types of condensation. It is shown that the complexity of the processes of organic matter degradation does not allow to develop an adequate model of its transformations after sedimentation only on the basis of understanding the kinetics of individual reactions and groups of reactions. We believe that the analytical apparatus of equilibrium thermodynamics is best suited for such descriptions of these complex systems. Using a thermodynamic model based on Jayne's formalism, we calculated the changes in the organic matter of type III-A kerogen in contact with organic and inorganic gases during the rocks dipping. The results of the calculations are the molar fractions of 44 additive components, which describe the solid phase of kerogen III for each depth up to 20 km inclusive, and organic and inorganic individual substances. It is established that the consolidating effect of pressure is an important factor influencing the composition of the geochemical system, including type III kerogen, in the depth range of 6-13 km, at the same time with subsequent dipping, the destructive temperature factor prevails. Entropy has shown that the depth range from 6 to 15 km with a maximum of 7.5 km can be considered the most suitable for the formation of hydrocarbon fluid. The branching coefficients proposed in this work for solid (type III kerogen) and gas-fluid phases confirm experimental works on estimating the direction of kerogen transformation processes with immersion. The complex nature of the balance between constitutional water and kerogen, depending on the heat flux and depth, has been established. To analyze this equilibrium, a simple equilibrium constant of dehydration is proposed, which generalizes the conversion of water in the kerogen matrix.

Effective Climate Policy Needs Non-Combustion Uses for Hydrocarbons

A central issue that is discussed in climate policy is the fear of owners of stocks of fossil hydrocarbon deposits that high CO2 taxes and bans on the combustion use of hydrocarbons will turn their stocks into stranded assets. They might react by extracting and selling their reserves today: a rush to burn results. We show how the stranded-asset problem could be avoided or strongly moderated. We analyze a simple intertemporal equilibrium with a given stock of fossil hydrocarbons. In this framework the following properties hold: For a climate-neutral solution to the rush-to-burn problem it is important to maintain existing and generate new markets for climate-neutral products from fossil hydrocarbons in the future, where we give examples for such products. Subsidies for such products (or for their innovation) reduce the rush-to-burn problem. In contrast, the creation of substitutes for fossil hydrocarbon-based climate-neutral products, or subsidies for such products reduce the market for products made from fossil hydrocarbons. This can aggravate the stranded-assets problem and thus can have a climate-damaging effect.

A Simplified Limit Equilibrium Model for Calculating Limit Support Pressure on Shallow Shield Tunnel face

Shield tunnel excavation face may collapse if the applied support pressure is not enough. Based on an elaborated failure mode of shallow shield tunnel face, the least limit support pressure to maintain stability is analysed by using the limit equilibrium method. The calculated limit support pressure decreases nonlinearly with the increase of friction angle, decreases linearly with the increase of cohesion, and decreases with the ratio of buried depth to tunnel diameter. By comparing the calculated results with existing tests, the theoretical model was shown to be reasonably predict the limit support pressure of tunnel excavation face in sand under drained condition and in clay under undrained condition.

The Shock Reaction in a Simple Close Economy

As the general objective of a representative government is to achieve in creating the economic conditions that support the wellbeing of citizen, it, thus, needs to design and implement its policies in an appropriated manner. Hence, to support the valuable information for designing and implementing such policies, this work is designed to gain that information by trying to identify the reactions of various variables to government policies. To meet this objective, this work proposed a simple close economy Dynamic stochastic general equilibrium (DSGE) model with the public goods in the household consumption bundle. Also, the usual shocks studied in the DSGE model were included in the reaction investigation process. The Bayesian technique is then employed to estimate the model parameters by using the quarterly detrended data of Thailand in the period of 2001 to 2019. The result showed the crowding-out effect driven by government spending. Also, the reactions of the major macroeconomic variables to each shock were consistent with some previous studies.

Modeling functional and juridical informality: a guide for data-driven policy

ABSTRACT This paper reviews a methodology for integrating the informal sector into social accounting matrices and a simple computable general equilibrium model. The model distinguishes informality according to whether the presence of the informal sector is due to capital limitations, functional informality, versus juridical informality, which may arise as an illegal or quasi-legal competitive strategy that runs the risk of state sanctions. The goal is to offer policymakers some perspectives on how the informal sector could be incorporated into the economy without first repressing it in a way that inhibits its transformation.

Application of the Bayesian New Keynesian DSGE Model to Polish Macroeconomic Data

In the paper we estimate a simple New Keynesian Dynamic Stochastic General Equilibrium NK DSGE model on the basis of Polish macro data from the period 2000-2019. The model is specified similarly to Galí (2008) with the use of the Bayesian approach. The NK DSGE model combines the advantages of both structural models and time-series models and, therefore, shows a significant degree of alignment with empirical data. The Bayesian estimation is based on the prior distribution of the model input parameters, which are later compared with the posteriors. The results obtained allow for assessing the persistence of responses to technological, inflationary and monetary policy shocks. On the basis of the NK DSGE model, we formulate a perception of macroeconomic interactions, e.g. nominal interest rates’ association with inflation and the output gap. In other words, the NK DSGE model provides a better understanding of the relationship between interest rates, inflation and the output gap. This in turn makes it easier to understand the monetary policy response function.

Productivity, relative sectoral prices, and total factor productivity: Theory and evidence

This study examines the role of sectoral productivity in explaining the structural change process and relative sectoral prices in an economy. A simple two-sector general equilibrium model was developed to show that improvement in agricultural productivity relocates labor away from the agriculture sector under certain conditions. In contrast to the conventional wisdom that relative sectoral prices reflect relative sectoral productivities, this study shows the possibility of a U-shaped relationship between the two factors and found a structural break in their relationship based on the US data during 1920–1965. We estimate our model parameters by using the simulated method of moments after constructing a suitable structural model with historical data on the US economy for the previous two centuries (1820–2017). For the most plausible set of parameter values, our model could primarily replicate the relative price of farm movement and the agricultural labor share of the US economic history.

Dynamic Assessment of Basin-scale Pressure Dissipation and Impact on Storage Capacity Using Accelerated Methodology

Storage capacity of closed or semi-closed aquifer systems is constrained by build-up of overpressure. Estimation of pressure- constrained storage capacity of a basin-scale resource should be obtained by dynamic simulation of multi-site CO2 injection. The limitation on pressure can occur near the injection where overpressure is greatest, or further away where the basin is shallower. Pressure build-up and dissipation can be impacted by heterogeneity and far-field boundary conditions, which may involve significant uncertainty. The impact of uncertainty in heterogeneity on pressure-constrained capacity is not very well understood due to the computational burden of basin-scale simulations. In this study, we quantify the uncertainty of storage capacity due multi- site injection within a large-scale heterogeneous aquifer system using ensemble-based methods. The approach is accelerated by employing simplified vertical equilibrium methods for the forward model. We find that uncertainty in large-scale heterogeneity results in a wide distribution of estimated capacity, however the estimated mean is less sensitive to variation of the geostatistical model. The effect of average permeability and change in boundary conditions has a greater impact on the estimated mean than variation in the underlying geostatistical model. This implies that for large-scale systems, heterogeneity is important to take into account, but precision in the geostatistical model is less important than other basin-scale quantities.

A Simple Teabag Equilibrium Passive Sampler using hydrophilic divinylbenzene sorbent for contaminants of emerging concern in the marine environment.

A promising concept for sampling contaminants of emerging concern (CECs) using a home-made Simple Teabag Equilibrium Passive Sampler (STEPS) containing hydrophilic divinylbenzene (h-DVB) sorbent is presented and evaluated for application in estuarine systems. The uptake of a multi-class mixture of CECs with a broad polarity range (Log P ranging from -0.1 to 9.9) was investigated in static exposure batch experiments. Sampling rates (Rs) and equilibrium partitioning coefficients (Ksw) were determined for up to 74 CECs. Fast uptake (Rs=0.3-12L d-1) was noticed and the STEPS attained equilibrium partitioning after 1 to 2weeks of exposure, with Log Ksw ranging from 4.1 to 6.5Lkg-1. Field application of this novel h-DVB containing STEPS, followed by ultra-high performance liquid chromatography coupled to high-resolution Orbitrap mass spectrometry, revealed the presence of up to 40 steroidal hormones, (alkyl)phenols, phthalates, pharmaceuticals, personal care products, and pesticides in the Belgian Part of the North Sea. The measured trace concentrations (from 0.003ngL-1 to 1.9μgL-1) and good precision (average RSD<30%, n=3) demonstrate the STEPS as fit-for-purpose for micropollutant analysis in the marine environment.

A MODEL OF COLLATERAL: ENDOGENIZING THE BORROWING CONSTRAINT

AbstractThis article presents a simple equilibrium model in which collateralized credit emerges endogenously. In a frictional world, where commitment is limited and agent's actions are not publicly observable, we show that collateral can serve as a credible device that prevents the participating parties from reneging. Our theory provides a microfoundation to justify the borrowing constraints that are widely used in the existing macroeconomic models. Using the model, we explain the payment puzzle. We also show that some assets are more suitable as collateral than others with different physical properties, for example, storable asset versus durable asset.

The Hydromechanical Interplay in the Simplified Three-Dimensional Limit Equilibrium Analyses of Unsaturated Slope Stability

This paper presents a three-dimensional slope stability limit equilibrium solution for translational planar failure modes. The proposed solution uses Bishop’s average skeleton stress combined with the Mohr–Coulomb failure criterion to describe soil strength evolution under unsaturated conditions while its formulation ensures a natural and smooth transition from the unsaturated to the saturated regime and vice versa. The proposed analytical solution is evaluated by comparing its predictions with the results of the Ruedlingen slope failure experiment. The comparison suggests that, despite its relative simplicity, the analytical solution can capture the experimentally observed behaviour well and highlights the importance of considering lateral resistance together with a realistic interplay between mechanical parameters (cohesion) and hydraulic (pore water pressure) conditions.

Pareto-Improving Supply Subsidy in a Simple General Oligopoly Equilibrium Model with Pollution Permits

We introduce a competitive pollution permit market in a two-sector oligopoly equilibrium model. In this model, one commodity is inelastically supplied by one competitive trader and another one is produced by a finite set of oligopolists, using the first commodity as an input. The production of the second commodity is a polluting activity. We study both the competitive and oligopoly equilibria. We provide some conditions under which a supply subsidy given to the oligopolists that is financed by a tax on the competitive agent is Pareto-improving.

Predicting GPCR-Cholesterol Interaction Sites by Coarse-Grained MD

Cholesterol has been shown to be important to the function of G-protein coupled receptors (GPCRs), the largest class of signaling membrane proteins and the largest class of drug targets in the human genome. However, experiments cannot always reveal specific interactions between GPCRs and cholesterol molecules. We developed and validated a computational method based on coarse-grained molecular dynamics (CGMD) simulations to predict sites on the protein where cholesterol may preferentially interact. In order to sample time scales on the order of a hundred μs, CGMD was performed and analyzed for several GPCRs for which experimental validation data are available, including the beta-2 adrenergic receptor (β2AR) and the cannabinoid receptors CB1R and CB2R. We focused on a number of physically meaningful observables as descriptors that report on various aspects of cholesterol binding with the goal of identifying the most promising descriptors. Specifically, we computed from the equilibrium simulations the site occupancy, the on and off rates for cholesterol binding to specific residues, the corresponding equilibrium constant (assuming a simple binding equilibrium), and the corresponding binding free energy. As the central quantity for this analysis we computed survival functions for protein-lipid interactions from contact times and extracted rates by either least-squares fitting to a two-term hyperexponential function or a Bayesian approach. Potential binding sites were ranked by high occupancy, high on rate, slow off rate, low dissociation constant (or more negative binding free energy). Theoretically determined bindings sites were compared against crystallographic structures and the known cholesterol preference of CB1R over CB2R. Overall, the binding off rate gave the best indication of cholesterol binding sites compatible with experiments. Our work suggests best practices for determining cholesterol binding sites on GPCRs (and other membrane proteins) and motivates the use of physically meaningful observables for cholesterol-protein analysis.

On a simple, stable and efficient bond model for inter-particle adhesion

In this work, we explore the underlying structure of most common bond models used in particle dynamics and discrete element methods, to derive simple equilibrium conditions and stability requirements that must be fulfilled for a model to stand effective and reliable. We then propose a simple model taking into account such considerations, with which we are able to capture inter-particle bonding very straightforwardly once a given bonding criterion is met. The model can be particularized to work with different contact models, such as Hertzian contact, as well as with different adhesion models, such as the classical Johnson, Kendal and Roberts (JKR) model. The derived requirements yield guidelines that may help the selection of proper parameter values (such as, but not only, the stiffness of the bond) for most common bond models, thereby guiding (or even avoiding) burdensome problem-dependent calibration. Numerical examples are provided for illustration.

Static and dynamic tests on steel joints equipped with novel structural details for progressive collapse mitigation

This paper presents static and dynamic tests on nominally-pinned steel joints equipped with novel structural details for progressive collapse mitigation. The proposed structural details utilise the exceptional ductility and strength of stainless steel pins to enhance both the tie force and the rotational capacity of a vulnerable steel joint. The stainless steel pins along with additional supporting elements are installed in the joint region without interfering with the design for gravity loads, and they can be used for both new designs and to retrofit existing steel buildings. A static test on a vulnerable industry-standard steel fin-plate connection is first presented followed by two static tests on the same connection retrofitted with the proposed structural details. The retrofitted connections were subsequently tested under dynamic conditions with increasing imposed loading using a test setup that simulates a sudden column loss scenario. The test results showed that nominally-pinned joints equipped with the proposed structural details can achieve the required tie force capacity while undergoing rotations larger than 0.2 rad. Analytical equations based on simple joint equilibrium are used to validate the results of the static tests. An analytical method based on the energy conservation principle is also proposed and comparison with the dynamic tests shows very good predictive capability when the assumed loss of energy is 22%.

Identifying credit demand, financial intermediation, and supply of funds shocks: A structural VAR approach

In this paper, we identify three exogenous shocks to credit market: demand for credit, supply of funds into the financial system, and the willingness to lend of financial institutions (financial intermediation), and also, determine the contribution of these shocks to fluctuations in the credit market and overall economic activity. We estimate a structural vector autoregression model where the three credit shocks are identified with a set of sign restrictions motivated by a simple partial equilibrium model of financial intermediation. We find that the credit demand shock explains significantly the variations in the long-term loan rate proxied by the Moody’s Baa corporate bond yield, while the supply of funds shock contributes to most of the fluctuations in the short-term commercial paper rate. The financial intermediation shock drives most of the fluctuations in the quantity of loans as well as the spread between the Baa and commercial paper rates. Of the credit shocks, we find that the financial intermediation shock has the largest impact on real economic activity. In fact, our analysis implies that the sharp decline in output during the 2007–2009 financial crisis is largely attributable to the financial intermediation shock, along with shocks originating outside of the financial system.