Optimization in Non-Standard Problems. An Application to the Provision of Public Inputs
- 67 Downloads
This paper describes a new direct search method for solving non-standard constrained optimization problems for which standard methodologies do not work properly. Our method (the Rational Iterative Multisection-RIM-algorithm) consists of different stages that can be interpreted as solutions according to different precision requirements. We have performed an application of RIM method to the case of public inputs provision. We prove that the RIM approach and standard methodologies achieve the same results with regular optimization problems while the RIM algorithm takes advantage over others comparable direct-search methods when facing non-standard optimization problems.
KeywordsDirect search Constrained optimization Multisection Optimal taxation Public input
JEL ClassificationC6 H21 H3 H41 H43
Unable to display preview. Download preview PDF.
- Benninga S. (1989) Numerical techniques in finance. MIT Press, London, EnglandGoogle Scholar
- Feehan J. P. (1989) Pareto-efficiency with three varieties of public input. Public Finance/Finances Publiques 44: 237–248Google Scholar
- Gaube T. (2007) A note on the link between public expenditures and distortionary taxation. Economics Bulletin 8(9): 1–10Google Scholar
- Kelley, C. T. (2003). Solving nonlinear equations with Newton’s method, no 1 in fundamentals of algorithms. Philadelphia, PA: SIAM.Google Scholar
- Martínez, D., & Sánchez, A. J. (2010b). How sensitive is the provision of public inputs to specifications? WP ECON 10.04, Universidad Pablo de Olavide, Departamento de Economia.Google Scholar
- Mathews J.H., Fink K.D. (2004) Numerical methods using Matlab (4th ed.). Prentice-Hall, New JerseyGoogle Scholar
- Pigou A.C. (1947) A study in public finance (3rd ed.). Macmillan, LondonGoogle Scholar
- Wilson J. D. (1991a) Optimal public good provision with limited lump-sum taxation. American Economic Review 81(1): 153–166Google Scholar
- Xidonas, P., Mavrotas, G., & Psarras, J. (2010b). Portfolio construction on the Athens Stock Exchange: A multiobjective optimization approach. Optimization (forthcoming).Google Scholar