Accounting for the Current Account Behavior in ASEAN-5

Current account are an endogenous variable that contain information about the behavior of the economics agents and is important for economic policymaking as it gives a broad reflection of the stance of macroeconomics policies. The imbalances in current account are a reflection of the forward-looking, dynamic saving and investment decisions in the intertemporal approach to current account modeling. This study empirically analyzed the anatomy of the dynamic current account behavior for the ASEAN-5 countries using present value model. Despite the simplicity, the statistical computations suggest that the agents behave as the forward-looking rational agents in the face of the shocks in the three out of five economies. This implies that the current account acts as a buffer to smooth the consumption in the presence of shock and optimally smoothing its consumption path for these countries.Current Account; Present Value Model; Consumption Smoothing; Consumption Tilting

Agent-based computational economics and African modeling:perspectives and challenges

In recent years, the government, of African Countries has assumed major responsibilities for economic reforms and growth. In attempting to describe their economies, economists (policymakers) in many African Countries have applied certain models that are by now widely known: Linear programming models, input-output models, macro-econometric models, vector auto regression models and computable general equilibrium models. Unfortunately, economies are complicated systems encompassing micro behaviors, interaction patterns and global regularities. Whether partial or general in scope, studies of economic systems must consider how to handle difficult real-world aspects such as asymmetric information, imperfect competition, strategic interaction, collective learning and multiple equilibria possibility. This paper therefore argues for the adoption of alternative modeling (bottom-up culture-dish) approach known as AGENT-BASED Computational Economics (ACE), which is the computational study of African economies modeled as evolving systems of autonomous interacting agents. However, the software bottleneck (what rules to write for our agents) remains the primary challenge ahead

Agent-based computational economics and African modeling:perspectives and challenges

In recent years, the government, of African Countries has assumed major responsibilities for economic reforms and growth. In attempting to describe their economies, economists (policymakers) in many African Countries have applied certain models that are by now widely known: Linear programming models, input-output models, macro-econometric models, vector auto regression models and computable general equilibrium models. Unfortunately, economies are complicated systems encompassing micro behaviors, interaction patterns and global regularities. Whether partial or general in scope, studies of economic systems must consider how to handle difficult real-world aspects such as asymmetric information, imperfect competition, strategic interaction, collective learning and multiple equilibria possibility. This paper therefore argues for the adoption of alternative modeling (bottom-up culture-dish) approach known as AGENT-BASED Computational Economics (ACE), which is the computational study of African economies modeled as evolving systems of autonomous interacting agents. However, the software bottleneck (what rules to write for our agents) remains the primary challenge ahead

Accounting for the Current Account Behavior in ASEAN-5

Current account are an endogenous variable that contain information about the behavior of the economics agents and is important for economic policymaking as it gives a broad reflection of the stance of macroeconomics policies. The imbalances in current account are a reflection of the forward-looking, dynamic saving and investment decisions in the intertemporal approach to current account modeling. This study empirically analyzed the anatomy of the dynamic current account behavior for the ASEAN-5 countries using present value model. Despite the simplicity, the statistical computations suggest that the agents behave as the forward-looking rational agents in the face of the shocks in the three out of five economies. This implies that the current account acts as a buffer to smooth the consumption in the presence of shock and optimally smoothing its consumption path for these countries

Modeling economic systems as locally-constructive sequential games

Real-world economies are open-ended dynamic systems consisting of heterogeneous interacting participants. Human participants are decision-makers who strategically take into account the past actions and potential future actions of other participants. All participants are forced to be locally constructive, meaning their actions at any given time must be based on their local states; and participant actions at any given time affect future local states. Taken together, these essential properties imply real-world economies are locally-constructive sequential games. This paper discusses a modeling approach, Agent-based Computational Economics, that permits researchers to study economic systems from this point of view. ACE modeling principles and objectives are first concisely presented and explained. The remainder of the paper then highlights challenging issues and edgier explorations that ACE researchers are currently pursuing

Foreign Exchange Risk Premium Determinants: Case of Armenia

This paper studies foreign exchange risk premium using the uncovered interest rate parity framework in a single country context. The analysis is performed using weekly data on foreign and domestic currency deposits in Armenian banking system. The paper provides the results of the simple tests of uncovered interest parity condition, which indicate that contrary to established view dominating in empirical literature there is a positive correspondence between exchange rate depreciation and interest rate differentials in Armenian deposit market. Furthermore, the paper presents and discusses a systematic positive risk premium required by the economic agents for foreign exchange transactions, which increases over the investment horizon. The two currency affine term structure framework is applied to identify the factors driving the systematic exchange rate risk premium in Armenia. At the end, possible directions for further research are outlined.http://deepblue.lib.umich.edu/bitstream/2027.42/40197/3/wp811.pd

Two-Country Models of Monetary and Fiscal Policy: What Have We Learned? What More Can We Learn?

This paper surveys the literature that uses two-country models to analyze monetary and fiscal policy issues faced in interdependent economies. We discuss sources of structural interdependence that researchers typically include in these models. We describe many of the types of policy interactions that researchers have considered and summarize the key results that they have obtained. Finally, we briefly explain the limitations of two-country models and outline directions that this literature might usefully be extended