Methods and Tools for the Microsimulation and Forecasting of Household Expenditure - A Review

This paper reviews potential methods and tools for the microsimulation and forecasting of household expenditure. It begins with a discussion of a range of approaches to the forecasting of household populations via agent-based modelling tools. Then it evaluates approaches to the modelling of household expenditure. A prototype implementation is described and the paper concludes with an outline of an approach to be pursued in future work

Methods and Tools for the Microsimulation and Forecasting of Household Expenditure

This paper reviews potential methods and tools for the microsimulation and forecasting of household expenditure. It begins with a discussion of a range of approaches to the forecasting of household populations via agent-based modelling tools. Then it evaluates approaches to the modelling of household expenditure. A prototype implementation is described and the paper concludes with an outline of an approach to be pursued in future work

The role of the reference alternative in the specification of asymmetric discrete choice models

Within the discrete choice modelling literature, there has been growing interest in including reference alternatives within stated choice survey tasks. Recent studies have investigated asymmetric utility specifications by estimating discrete choice models that include different parameters according to gains and losses relative to the values of the reference attributes. This paper analyses asymmetric discrete choice models by comparing specifications expressed as deviations from the reference point and specifications expressed in absolute values. The results suggest that the selection of the appropriate asymmetric model specification should be based on the type of the stated choice experiment.stated choice experiments, reference alternative, preference asymmetry, willingness to pay

Functional income distribution and aggregate demand in the Euro-area

An increase in the wage share has contradictory effects on the subaggregates of aggregate demand. Private consumption expenditures ought to increase because wage incomes typically are associated with higher consumption propensities than capital incomes. Investment expenditures ought to be negatively affected because investment will positively depend on profits. Net exports will be negatively affected because an increase in the wage share corresponds to an increase in unit labor costs and thus a loss in competitiveness. Theoretically aggregate demand can therefore be either wage led or profit led depending on how these effects add up. The results will crucially depend on how open the economy is internationally. The paper estimates a Post-Kaleckian macro model incorporating these effects for the Euro area and finds that the Euro area is presently in a wage-led demand regime. Implications for wage policies are discussed. (author's abstract)Series: Department of Economics Working Paper Serie

Firm-Level Labour Demand: Adjustment in Good Times and During the Crisis

Using a large panel of Czech manufacturing firms with 50 or more employees, we update the firm-level labour demand elasticity estimates for 2002-2009. The economic crisis of 2008-2009 provides a source of variation needed for getting estimates that cover not only times of growth, but also a period of economic contraction. We find that in normal times (until 2007), the short-term elasticity is -0.53 with respect to wages and 0.43 with respect to sales, while the long-term elasticities are close to or below unity, standing at -0.94 for wages and 0.76 for sales. Both the wage and sales elasticities increased during the crisis, suggesting that firms became demand constrained, but only the sales elasticity is significantly different. The long-term wage elasticity close to -1 in the period before and during the crisis suggests that firms' employment decisions are made within fixed budgets. Finally, we find that the inclusion of workers hired through temporary work agencies does not significantly affect the results, indicating that firms take into account total labour when deciding on employment and that hired workers are used as an equal labour demand channel with lower adjustment costs. As a robustness check, our results are qualitatively comparable with the narrative evidence from an ad-hoc firm-level survey on wage and price formation conducted in 2007 and 2009 within the ESCB Wage Dynamics Network.Czech Republic, elasticity, firm-level data, labour demand, sales elasticity, wage elasticity, the crisis of 2008-2009.

Estimation of indirect cost and evaluation of protective measures for infrastructure vulnerability: A case study on the transalpine transport corridor

Infrastructure vulnerability is a topic of rising interest in the scientific literature for both the general increase of unexpected events and the strategic importance of certain links. Protective investments are extremely costly and risks are distributed in space and time which poses important decision problems to the public sector decision makers. In an economic prospective, the evaluation of infrastructure vulnerability is oriented on the estimation of direct and indirect costs of hazards. Although the estimation of direct costs is straightforward, the evaluation of indirect cost involves factors non-directly observable making the approximation a difficult issue. This paper provides an estimate of the indirect costs caused by a two weeks closure of the north-south Gotthard road corridor, one of the most important infrastructure links in Europe, and implements a cost-benefit analysis tool that allows the evaluation of measures ensuring a full protection along the corridor. The identification of the indirect cost relies on the generalized cost estimation, which parameters come from two stated preference experiments, the first based on actual condition whereas the second assumes a road closure. The procedure outlined in this paper proposes a methodology aimed to identify and quantify the economic vulnerability associated with a road transport infrastructure and, to evaluate the economic and social efficiency of a vulnerability reduction by the consideration of protective measures.infrastructure vulnerability, choice experiment, cost-benefit analysis, freight transport

A comparison of prospect theory in WTP and preference space

The importance of willingness to pay (WTP) and willingness to accept (WTA) measures in the evaluation of policy measures has led to a constant stream of research examining survey methods and model specifications seeking to capture and explain the concept of marginal rates of substitution as much as possible. Stated choice experiments pivoted around a reference alternative allow the specification of discrete choice models to accommodate the prospect theory reference dependence assumption. This permits an investigation of theories related to loss aversion and diminishing sensitivity, and to test the discrepancy between WTP and WTA, widely documented within the literature. With more advanced classes of discrete choice models at our disposal, it is now possible to test different preference specifications that are better able to measure WTP and WTA values. One such model allowing for utility to be directly specified in WTP space has recently shown interesting qualities. This paper compares and contrasts models estimated in preference space to those estimated in WTP space allowing for asymmetry in the marginal utilities by estimating different parameters according to reference, gain and loss values. The results suggest a better model fit for the data estimated in WTP space, contradicting the findings of previous researches. The parameter estimates report significant evidence of loss aversion and diminishing sensitivities even though the symmetric specification outperforms the asymmetric ones. Finally, the analysis of the WTP and WTA measures confirms the higher degree of WTA compared to WTP, and highlights the appeal of the WTP space specification in terms of plausibility of the estimated measures.choice experiments, willingness to pay space, preference asymmetry

Accounting for WTP/WTA discrepancy in discrete choice models: Discussion of policy implications based on two freight transport stated choice experiments

A key input in cost-benefit analysis is represented by the marginal rate of substitution which expresses the willingness to pay, or its counterpart willingness to accept, for both market and non-market goods. The consistent discrepancy between these two measures observed in the literature suggests the need to estimate reference dependent models able to capturing loss aversion by distinguishing the value attached to a gain from the value attached to a loss according to reference dependent theory. This paper proposes a comparison of willingness to pay and willingness to accept measures estimated from models with both symmetric and reference dependent utility specifications within two different freight transport stated choice experiments. The results show that the reference dependent specification outperforms the symmetric specification and they prove the robustness of reference dependent specification over datasets designed according different attributes levels ranges. Moreover we demonstrate the policy relevance of asymmetric specifications illustrating the strong implications for cost-benefit analysis in two case studies.WTP/WTA discrepancy, freight choice, policy evaluation