The Diablo 3 Economy: An Agent Based Approach
Makram El-Shagi, Gregor von Schweinitz
Computational Economics,
No. 2,
2016
Abstract
Designers of MMOs such as Diablo 3 face economic problems much like policy makers in the real world, e.g. inflation and distributional issues. Solving economic problems through regular updates (patches) became as important to those games as traditional gameplay issues. In this paper we provide an agent framework inspired by the economic features of Diablo 3 and analyze the effect of monetary policy in the game. Our model reproduces a number of features known from the Diablo 3 economy such as a heterogeneous price development, driven almost exclusively by goods of high quality, a highly unequal wealth distribution and strongly decreasing economic mobility. The basic framework presented in this paper is meant as a stepping stone to further research, where our evidence is used to deepen our understanding of the real-world counterparts of such problems. The advantage of our model is that it combines simplicity that is inherent to model economies with a similarly simple observable counterpart (namely the game environment where real agents interact). By matching the dynamics of the game economy we can thus easily verify that our behavioral assumptions are good approximations to reality.
Read article
Global Food Prices and Business Cycle Dynamics in an Emerging Market Economy
Oliver Holtemöller, Sushanta Mallick
Abstract
This paper investigates a perception in the political debates as to what extent poor countries are affected by price movements in the global commodity markets. To test this perception, we use the case of India to establish in a standard SVAR model that global food prices influence aggregate prices and food prices in India. To further analyze these empirical results, we specify a small open economy New-Keynesian model including oil and food prices and estimate it using observed data over the period from 1996Q2 to 2013Q2 by applying Bayesian estimation techniques. The results suggest that big part of the variation in inflation in India is due to cost-push shocks and, mainly during the years 2008 and 2010, also to global food price shocks, after having controlled for exogenous rainfall shocks. We conclude that the inflationary supply shocks (cost-push, oil price, domestic food price and global food price shocks) are important contributors to inflation in India. Since the monetary authority responds to these supply shocks with a higher interest rate which tends to slow growth, this raises concerns about how such output losses can be prevented by reducing exposure to commodity price shocks and thereby achieve higher growth.
Read article
Public Bank Guarantees and Allocative Efficiency
Reint E. Gropp, Andre Guettler, Vahid Saadi
Abstract
In the wake of the recent financial crisis, many governments extended public guarantees to banks. We take advantage of a natural experiment, in which long-standing public guarantees were removed for a set of German banks following a lawsuit, to identify the real effects of these guarantees on the allocation of credit (“allocative efficiency”). Using matched bank/firm data, we find that public guarantees reduce allocative efficiency. With guarantees in place, poorly performing firms invest more and maintain higher rates of sales growth. Moreover, firms produce less efficiently in the presence of public guarantees. Consistently, we show that guarantees reduce the likelihood that firms exit the market. These findings suggest that public guarantees hinder restructuring activities and prevent resources to flow to the most productive uses.
Read article
Are there Business Cycles “beyond GDP“? Alternative Measures to GDP at Business Cycle Frequencies
Jörg Döpke, Philip Maschke
Applied Economics Quarterly,
No. 2,
2015
Abstract
We discuss properties of alternatives or complements to GDP as a measure of welfare at business cycle frequencies. Our results imply that the suggested indicators show practically no cycle at all and their methodologies can be questioned. First, data are not available at an appropriate quality and frequency. Second, the suggested time series sometimes correlate negatively with each other. Third, cross-section and quasi-panel evidence based on different samples of countries reveals no impact of the stance of the business cycle on some suggested welfare measures. Therefore, alternative welfare measures do not show an equal picture on business cycle frequencies compared to GDP-based measures.
Read article
R&D Collaboration for Environmental Innovation
Gunnar Pippel
International Journal of Innovation Management,
No. 1,
2015
Abstract
FuE-Kooperationen spielen eine bedeutende Rolle bei der Schaffung von Umweltinnovationen. Allerdings zeigt uns die Literatur, dass FuE-Kooperationen nicht immer vorteilhaft sind. Daher ist eine differenziertere Betrachtungsweise des Einflusses von FuE-Kooperationen auf die Fähigkeit von Unternehmen, Umweltinnovationen hervorzubringen, notwendig. Das Papier untersucht diesen Zusammenhang und differenziert dabei nach verschiedenen Typen von Kooperationspartnern wie Kunden, Lieferanten, Universitäten, staatlichen Forschungseinrichtungen, Konkurrenten, Beratern und anderen Firmen innerhalb der gleichen Firmengruppe. Zudem wird der Frage nachgegangen, ob Diversität von Kooperationspartnern einen Einfluss auf die Umweltinnovationsfähigkeit von Unternehmen hat. Dabei werden Daten von 2337 deutschen Unternehmen für eine Regressionsanalyse verwendet. Deutlich wird, dass FuE-Kooperationen mit Kunden, Lieferanten, Universitäten, staatlichen Forschungseinrichtungen, Beratern und anderen Firmen innerhalb der gleichen Firmengruppe einen signifikant positiven Einfluss auf die Umweltinnovationsfähigkeit haben. FuE-Kooperationen mit Konkurrenten haben keinen signifikanten Einfluss. Die Diversität von FuE-Kooperationspartnern hat ebenfalls einen signifikant positiven Einfluss auf die Umweltinnovationsfähigkeit.
Read article
Understanding the Great Recession
Mathias Trabandt, Lawrence J. Christiano, Martin S. Eichenbaum
American Economic Journal: Macroeconomics,
No. 1,
2015
Abstract
We argue that the vast bulk of movements in aggregate real economic activity during the Great Recession were due to financial frictions. We reach this conclusion by looking through the lens of an estimated New Keynesian model in which firms face moderate degrees of price rigidities, no nominal rigidities in wages, and a binding zero lower bound constraint on the nominal interest rate. Our model does a good job of accounting for the joint behavior of labor and goods markets, as well as inflation, during the Great Recession. According to the model the observed fall in total factor productivity and the rise in the cost of working capital played critical roles in accounting for the small drop in inflation that occurred during the Great Recession.
Read article
The Quantity Theory Revisited: A New Structural Approach
Makram El-Shagi, Sebastian Giesen
Macroeconomic Dynamics,
No. 1,
2015
Abstract
We propose a unified identification scheme to identify monetary shocks and track their propagation through the economy. We combine three approaches dealing with the consequences of monetary shocks. First, we adjust a state space version of the P-star type model employing money overhang as the driving force of inflation. Second, we identify the contemporaneous impact of monetary policy shocks by applying a sign restriction identification scheme to the reduced form given by the state space signal equations. Third, to ensure that our results are not distorted by the measurement error exhibited by the official monetary data, we employ the Divisia M4 monetary aggregate provided by the Center for Financial Stability. Our approach overcomes one of the major difficulties of previous models by using a data-driven identification of equilibrium velocity. Thus, we are able to show that a P-star model can fit U.S. data and money did indeed matter in the United States.
Read article
Does the Technological Content of Government Demand Matter for Private R&D? Evidence from US States
Viktor Slavtchev, Simon Wiederhold
Abstract
Governments purchase everything from airplanes to zucchini. This paper investigates the role of the technological content of government procurement in innovation. We theoretically show that a shift in the composition of public purchases toward high-tech products translates into higher economy-wide returns to innovation, leading to an increase in the aggregate level of private research and development (R&D). Collecting unique panel data on federal procurement in US states, we find that reshuffling procurement toward high-tech industries has an economically and statistically significant positive effect on private R&D, even after extensively controlling for other R&D determinants. Instrumental-variable estimations support a causal interpretation of our findings.
Read article
Interbank Lending and Distress: Observables, Unobservables, and Network Structure
Ben Craig, Michael Koetter, U. Krüger
Deutsche Bundesbank Discussion Paper, No. 18/2014,
No. 18,
2014
Abstract
We provide empirical evidence on the relevance of systemic risk through the interbank lending channel. We adapt a spatial probit model that allows for correlated error terms in the cross-sectional variation that depend on the measured network connections of the banks. The latter are in our application observed interbank exposures among German bank holding companies during 2001 and 2006. The results clearly indicate significant spillover effects between banks’ probabilities of distress and the financial profiles of connected peers. Better capitalized and managed connections reduce the banks own risk. Higher network centrality reduces the probability of distress, supporting the notion that more complete networks tend to be more stable. Finally, spatial autocorrelation is significant and negative. This last result may indicate too-many-to-fail mechanics such that bank distress is less likely if many peers already experienced distress.
Read article
Regional House Price Dynamics and Voting Behavior in the FOMC
Stefan Eichler, Tom Lähner
Economic Inquiry,
No. 2,
2014
Abstract
This paper examines the impact of house price gaps in Federal Reserve districts on the voting behavior in the Federal Open Market Committee (FOMC) from 1978 to 2010. Applying a random effects ordered probit model, we find that a higher regional house price gap significantly increases (decreases) the probability that this district's representative in the FOMC casts interest rate votes in favor of tighter (easier) monetary policy. In addition, our results suggest that Bank presidents react more sensitively to regional house price developments than Board members do.
Read article
