Migration modelling in the New Economic Geography

The benchmark of this paper is the Fujita and Thisse (2002) core-periphery model, which adds a R&D sector with skilled labor to create new varieties for the modern sector. The number of R&D firms increases not only with the number of existing patents and knowledge spillovers but also with the number of skilled workers who can migrate and choose theregion offering the better lifetime salary.The main objective of the present work is to analyse the long-term consequences of the choice of the migration law in Fujita and Thisse(2002)and in other comparable models. After describing throughoutly our benchmark,we introduce a different migration law à la Krugman (1991).Although the change in the migration law implies that individuals do not foresee price changes and hence their choice is somehow less optimal, the steady state outcome does not vary qualitatively:the unique steady state is a symmetric distribution of labor across regions. Later we change the benchmark model to avoid the so called monotonic convergence hypothesis, about which we discuss at large in the paper. When we model the economy using Romer (1990) two sector model applied to two regions allowing for skilled migration, then there exists a solution path that converges to a steady state which exhibits a distribution of skilled workers amongst regions which is no longer symmetric. In effect, the new steady state depends on technology, fixed costs, knowledge spill-overs and transportation costs.Economic geography,Spatial Dynamics, Migrations, Growth

Network-constrained models of liberalized electricity markets: the devil is in the details

Numerical models for electricity markets are frequently used to inform and support decisions. How robust are the results? Three research groups used the same, realistic data set for generators, demand and transmission network as input for their numerical models. The results coincide when predicting competitive market results. In the strategic case in which large generators can exercise market power, the predicted prices differed significantly. The results are highly sensitive to assumptions about market design, timing of the market and assumptions about constraints on the rationality of generators. Given the same assumptions the results coincide. We provide a checklist for users to understand the implications of different modelling assumptions

Complex networks analysis in socioeconomic models

This chapter aims at reviewing complex networks models and methods that were either developed for or applied to socioeconomic issues, and pertinent to the theme of New Economic Geography. After an introduction to the foundations of the field of complex networks, the present summary adds insights on the statistical mechanical approach, and on the most relevant computational aspects for the treatment of these systems. As the most frequently used model for interacting agent-based systems, a brief description of the statistical mechanics of the classical Ising model on regular lattices, together with recent extensions of the same model on small-world Watts-Strogatz and scale-free Albert-Barabasi complex networks is included. Other sections of the chapter are devoted to applications of complex networks to economics, finance, spreading of innovations, and regional trade and developments. The chapter also reviews results involving applications of complex networks to other relevant socioeconomic issues, including results for opinion and citation networks. Finally, some avenues for future research are introduced before summarizing the main conclusions of the chapter.Comment: 39 pages, 185 references, (not final version of) a chapter prepared for Complexity and Geographical Economics - Topics and Tools, P. Commendatore, S.S. Kayam and I. Kubin Eds. (Springer, to be published

Agent-Based Computational Economics

Agent-based computational economics (ACE) is the computational study of economies modeled as evolving systems of autonomous interacting agents. Starting from initial conditions, specified by the modeler, the computational economy evolves over time as its constituent agents repeatedly interact with each other and learn from these interactions. ACE is therefore a bottom-up culture-dish approach to the study of economic systems. This study discusses the key characteristics and goals of the ACE methodology. Eight currently active research areas are highlighted for concrete illustration. Potential advantages and disadvantages of the ACE methodology are considered, along with open questions and possible directions for future research.Agent-based computational economics; Autonomous agents; Interaction networks; Learning; Evolution; Mechanism design; Computational economics; Object-oriented programming.

Network-constrained models of liberalized electricity markets: the devil is in the details

Numerical models for electricity markets are frequently used to inform and support decisions. How robust are the results? Three research groups used the same, realistic data set for generators, demand and transmission network as input for their numerical models. The results coincide when predicting competitive market results. In the strategic case in which large generators can exercise market power, the predicted prices differed significantly. The results are highly sensitive to assumptions about market design, timing of the market and assumptions about constraints on the rationality of generators. Given the same assumptions the results coincide. We provide a checklist for users to understand the implications of different modelling assumptions.Market power, Electricity, Networks, Numeric models, Model comparison

Empirics of Agglomeration and Trade.

This chapter examines empirical strategies that have been or could be used to evaluate the importance of agglomeration and trade models. This theoretical approach, widely known as “New Economic Geography” (NEG), emphasizes the interaction between transport costs and firm-level scale economies as a source of agglomeration. NEG focuses on forward and backward trade linkages as causes of observed spatial concentration of economic activity. We survey the existing literature, organizing the papers we discuss under the rubric of five interesting and testable hypotheses that emerge from NEG theory. We conclude the chapter with an overall assessment of the empirical support for NEG and suggest some directions for future research.

Agglomeration patterns in a multi-regional economy without income effects

We study the long-run spatial distribution of industry using a multi-region core–periphery model with quasi-linear log utility Pflüger (Reg Sci Urban Econ 34:565–573, 2004). We show that a distribution in which industry is evenly dispersed among some of the regions, while the other regions have no industry, cannot be stable. A spatial distribution where industry is evenly distributed among all regions except one can be stable, but only if that region is significantly more industrialized than the other regions. When trade costs decrease, the type of transition from dispersion to agglomeration depends on the fraction of workers that are mobile. If this fraction is low, the transition from dispersion to agglomeration is catastrophic once dispersion becomes unstable. If it is high, there is a discontinuous jump to partial agglomeration in one region and then a smooth transition until full agglomeration. Finally, we find that mobile workers benefit from more agglomerated spatial distributions, whereas immobile workers prefer more dispersed distributions. The economy as a whole shows a tendency towards overagglomeration for intermediate levels of trade costs.info:eu-repo/semantics/acceptedVersio

The Benefits and Problems of Linking Micro and Macro Models: Evidence from a Flat Tax Analysis

Microsimulation (MS) and Computable General Equilibrium models (CGE) have both been widely used in policy analysis. Their combination allows the utilisation of the advantages of both types. The aim of this paper is to describe the state-of-the-art in simulation analysis and to illustrate the benefits and problems of linking micro and macro models by analysing flat tax reform proposals for Germany. Taking feedback effects into account has important implications for the evaluation of tax reforms. The analysis shows that a personal income flat tax can indeed overcome the fundamental equity efficiency trade-off while simultaneously increasing the tax revenue. However, this result does not hold for a flat tax combining a personal income flat tax with a corporate cash flow flat tax, even when allowing for an ex-post loss in revenue as the top of the distribution still gains the most.Microsimulation, CGE, linked micro macro models, flat tax