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A multi-agent model of a low income economy: simulating the distributional effects of natural disasters

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  • Ali Naqvi

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  • Miriam Rehm

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Abstract

This paper develops an agent-based model of a stylized low income region in order to study the impact of natural disasters on population displacement, income, prices, and consumption with a focus on distributions and coping strategies of low income groups. Key features of the model include the integration of decentralized markets into a full economy in a spatially explicit way and the analysis of short-run adjustment processes. The model is calibrated to a low income region of rural agrarian Pakistan that faced severe floods in 2010. Dynamic adaptation by agents in response to falling income includes migrating and running down savings. Despite these consumption smoothing strategies, some low income groups are vulnerable to starvation. The paper showcases two hypothetical policy scenarios, a cash and a food transfer program, and tracks their effects on the welfare of low income groups in the economy. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Ali Naqvi & Miriam Rehm, 2014. "A multi-agent model of a low income economy: simulating the distributional effects of natural disasters," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 9(2), pages 275-309, October.
  • Handle: RePEc:spr:jeicoo:v:9:y:2014:i:2:p:275-309
    DOI: 10.1007/s11403-014-0137-1
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    References listed on IDEAS

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    Cited by:

    1. repec:spr:nathaz:v:87:y:2017:i:1:d:10.1007_s11069-017-2763-0 is not listed on IDEAS
    2. Anna Klabunde & Frans Willekens, 2016. "Decision-Making in Agent-Based Models of Migration: State of the Art and Challenges," European Journal of Population, Springer;European Association for Population Studies, vol. 32(1), pages 73-97, February.
    3. repec:bla:rdevec:v:21:y:2017:i:3:p:713-730 is not listed on IDEAS
    4. repec:eee:wdevel:v:99:y:2017:i:c:p:395-418 is not listed on IDEAS

    More about this item

    Keywords

    Agent-based model; Natural disasters; Consumption smoothing; Distributions; Migration; Q54; C63; O15;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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