IDEAS home Printed from https://ideas.repec.org/p/pab/wpaper/06.35.html
   My bibliography  Save this paper

A new approach to solve non-regular constrained optimization problems. An application to optimal provision of public inputs

Author

Listed:
  • A. Jesus Sanchez Fuentes

    (Department of Economics, Universidad Pablo de Olavide)

  • Diego Martinez Lopez

    (Centro de Estudios Andaluces and Department of Economics, Universidad Pablo de Olavide)

Abstract

This paper describes a new method for solving non-regular constrained optimization problems when standard methodologies do not work properly. Our method (the Rational Iterative Multisection Procedure, RIMP) consists of different stages that can be interpreted as different requirements of precision by obtaining the optimal solution. We have performed an application of RIMP to the case of public inputs provision under two tax settings. We prove that the RIMP and the standard Newton-Raphson (NR) method achieve the same results with regular optimization problems while the RIMP takes advantage over NR when facing non-regular optimization problems.

Suggested Citation

  • A. Jesus Sanchez Fuentes & Diego Martinez Lopez, 2006. "A new approach to solve non-regular constrained optimization problems. An application to optimal provision of public inputs," Working Papers 06.35, Universidad Pablo de Olavide, Department of Economics.
    • Handle: RePEc:pab:wpaper:06.35
    as

    Download full text from publisher

    File URL: http://www.upo.es/serv/bib/wps/econ0635.pdf
    File Function: First version, 2006
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ming Chang, 2000. "Rules and Levels in the Provision of Public Goods: The Role of Complementarities between the public Good and Taxed Commodities," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(1), pages 83-91, February.
    2. James P. Feehan, 2002. "Distortionary Taxation and Optimal Public Spending on Productive Activities," Economic Inquiry, Western Economic Association International, vol. 40(1), pages 60-68, January.
    3. Kenneth L. Judd, 1998. "Numerical Methods in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262100711, April.
    4. Simon Benninga, 1989. "Numerical Techniques in Finance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262521415, April.
    5. Feehan, James P, 1989. "Pareto-Efficiency with Three Varieties of Public Input," Public Finance = Finances publiques, , vol. 44(2), pages 237-248.
    6. A. B. Atkinson & N. H. Stern, 1974. "Pigou, Taxation and Public Goods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(1), pages 119-128.
    7. Diego Martinez Lopez & A. Jesus Sanchez Fuentes, 2006. "On the optimal level of public inputs," Working Papers 06.34, Universidad Pablo de Olavide, Department of Economics, revised Mar 2008.
    8. Pestieau, Pierre, 1978. "Public intermediate goods and distortionary taxation," European Economic Review, Elsevier, vol. 7(4), pages 351-357, May.
    9. Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
    10. Sandmo, Agnar, 1972. "Optimality rules for the provision of collective factors of production," Journal of Public Economics, Elsevier, vol. 1(1), pages 149-157, April.
    11. Gaube, Thomas, 2000. "When do distortionary taxes reduce the optimal supply of public goods?," Journal of Public Economics, Elsevier, vol. 76(2), pages 151-180, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Diego Martinez Lopez & A. Jesus Sanchez Fuentes, 2006. "On the optimal level of public inputs," Working Papers 06.34, Universidad Pablo de Olavide, Department of Economics, revised Mar 2008.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. A. Sanchez & Diego Martinez, 2011. "Optimization in Non-Standard Problems. An Application to the Provision of Public Inputs," Computational Economics, Springer;Society for Computational Economics, vol. 37(1), pages 13-38, January.
    2. Diego Martinez Lopez & A. Jesus Sanchez Fuentes, 2006. "On the optimal level of public inputs," Working Papers 06.34, Universidad Pablo de Olavide, Department of Economics, revised Mar 2008.
    3. Diego Martinez-Lopez, 2004. "The optimal provision of public inputs in a second best scenario," Economics Bulletin, AccessEcon, vol. 8(3), pages 1-9.
    4. José Manuel González-Páramo & Diego Martínez López, 2002. "Provisión eficiente de inversión pública financiada con impuestos distorsionantes," Economic Working Papers at Centro de Estudios Andaluces E2002/08, Centro de Estudios Andaluces.
    5. repec:ebl:ecbull:v:8:y:2004:i:3:p:1-9 is not listed on IDEAS
    6. Ming Chung Chang & Hsiao-Ping Peng & Yan-Ching Ho, 2016. "The Social Marginal Cost Curve and a Corner Solution of the Second-Best Level of Public Good Provision: A Review and an Extension," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 152(3), pages 209-241, July.
    7. Wendner, Ronald, 2008. "Consumption Externalities and Pigouvian Ranking -- A Generalized Cobb-Douglas Example," MPRA Paper 8540, University Library of Munich, Germany.
    8. repec:ebl:ecbull:v:8:y:2006:i:4:p:1-6 is not listed on IDEAS
    9. Thomas Gaube, 2005. "Financing Public Goods with Income Taxation: Provision Rules vs. Provision Level," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(3), pages 319-334, May.
    10. Eskeland, Gunnar S., 2000. "Environmental protection and optimal taxation," Policy Research Working Paper Series 2510, The World Bank.
    11. Ronald Wendner, 2014. "Ramsey, Pigou, Heterogeneous Agents, and Nonatmospheric Consumption Externalities," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(3), pages 491-521, June.
    12. Diego Martínez López, 2004. "Vertical externalities in the provision of public inputs," Economic Working Papers at Centro de Estudios Andaluces E2004/47, Centro de Estudios Andaluces.
    13. repec:ebl:ecbull:v:8:y:2007:i:9:p:1-10 is not listed on IDEAS
    14. Wendner, Ronald & Goulder, Lawrence H., 2008. "Status effects, public goods provision, and excess burden," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 1968-1985, October.
    15. Diego Martinez & Tomas Sjögren, 2009. "Can Labor Market Imperfections Cause Overprovision of Public Inputs?," Working Papers 09.13, Universidad Pablo de Olavide, Department of Economics.
    16. Clive Fraser & Ali al-Nowaihi, 2006. "Comparing the first-best and second-best provision of a club good: an example," Economics Bulletin, AccessEcon, vol. 8(4), pages 1-6.
    17. Wendner, Ronald, 2010. "Ramsey, Pigou, and a Consumption Externality," MPRA Paper 21356, University Library of Munich, Germany.
    18. Eskeland, Gunnar S., 2000. "Public expenditures and environmental protection : when is the cost of funds irrelevant?," Policy Research Working Paper Series 2507, The World Bank.
    19. Ming Chang & Hsiao-Ping Peng, 2012. "Laffer effect, gross substitution, marginal cost of public funds and the level property of public good provision," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(5), pages 650-659, October.
    20. repec:grz:wpaper:2012-01 is not listed on IDEAS
    21. T. Daniel Woodbury, 2020. "The provision of infrastructure: benefit–cost criteria for optimizing local governments," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(3), pages 552-574, June.
    22. al-Nowaihi, Ali & Fraser, Clive D., 2007. "Is the public sector too large in an economy with club goods? A case when consumers differ in both tastes and incomes," Economic Modelling, Elsevier, vol. 24(6), pages 1018-1031, November.
    23. Gaspar, Ví­tor & Afonso, António, 2006. "Excess burden and the cost of inefficiency in public services provision," Working Paper Series 601, European Central Bank.
    24. Lockwood, Ben, 2003. "Imperfect competition, the marginal cost of public funds and public goods supply," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1719-1746, August.

    More about this item

    Keywords

    numerical analysis; constrained optimization; multisection; optimal taxation; public input.;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pab:wpaper:06.35. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Publicación Digital - UPO (email available below). General contact details of provider: https://edirc.repec.org/data/deupoes.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.