Optimization models in a transition economy

DOI10.1007/978-1-4899-7544-7MaRDI QIDQ476784zbMATH OpenOpenAlexFDO

Authors I. V. Sergienko, Mikhail Mikhalevich, Ludmilla Koshlai

Publication date 2 December 2014

Published in Springer Optimization and Its Applications (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1007/978-1-4899-7544-7

financial stabilization labor market models mathematical economics mathematical modeling transition economy

Applications of mathematical programming (90C90) Research exposition (monographs, survey articles) pertaining to game theory, economics, and finance (91-02) Special types of economic markets (including Cournot, Bertrand) (91B54) Economic dynamics (91B55) Macroeconomic theory (monetary models, models of taxation) (91B64) Economic models of real-world systems (e.g., electricity markets, etc.) (91B74)

Review text

This book, split into four chapters, explores the use of mathematical models to study the real world economic processes in the context of a transition economy. The first chapter considers financial stabilization models. This is an important element as financial crises are a key feature of transition economies, alongside high inflation and decreasing money purchasing power. The authors present several macroeconomic models to study these scenarios under various assumptions and describe in detail the implications of the models, such as the appropriate anti-inflation measures to take, the optimum money supply calculations and the necessary allocation of subsidies for some industries. The second chapter considers mathematical models for the structural, institutional and technological changes faced by a transition economy. This includes models for antimonopoly measures, which can be complicated due to the presence of imperfect competition, fiscal system optimization and technological reforms. These latter reforms present more difficulty in modeling as there is no standard solutions for structural and technological reforms, but rather the optimal approach will depend on the characteristics of each economy. A fuzzy set theory model combined with a regression model is proposed to achieve this. The next chapter studies imperfect competition on the labor market. The authors begin by presenting a detailed overview of the existing labor market models and highlight the challenges that these face when applied to the labor market of a transition economy. They begin by presenting two simple models of employment and growth based on constant and variable prices, before moving on to modeling of interbranch competition and bilateral monopolistic competition on the labor market. This chapter presents interesting results on the predicted impact of increases of the minimum wage to the labor market and the unemployment rate. The last chapter of this very interesting book considers the modeling of foreign economic activity in transition economies. The mathematical models presented aim to take into account the different types of production organization and ownership, instability of prices and varying customer demand as well as the need for the state to secure a certain level of necessary revenue. Suggestions about the transitional tax system are also outlined. Most of the models presented in this book are inspired by real problems faced by the post-communist countries in their transition from centralized-planning economies to open-market ones. Each chapter concludes with a useful discussion and a list of relevant references.

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