Application of Mathematics in Applied Economic

The paper develops a goal programming-based multi-criteria methodology, for assessing different machine learning (ML) regression models under accuracy and time efficiency criteria. The developed methodology provides users with high flexibility in assessing the models as it allows for a fast and computationally efficient sensitivity analysis of accuracy and time significance weights as well as accuracy and time significance threshold values. Four regression models were assessed, namely the decision tree, random forest, support vector and the neural network. The developed methodology was employed to forecast the time to failures of NASA Turbofans. The results reveal that decision tree regression (DTR) seems to be preferred for low values of accuracy weights (up to 30%) and low accuracy and time efficiency threshold values. As the accuracy weights tend to increase and for higher accuracy and time efficiency threshold values, random forest regression (RFR) seems to be the best choice. The preference for the RFR model however, seems to change towards the adoption of the neural network for accuracy weights equal to and higher than 90%. Full article

Wagner Law and Keynesian approaches are the two fundamental theories of public finance. The aim of this study is to assess empirical evidence for the public spending–national income relationship at a disaggregated level for the time period 1995–2019. The sectoral public expenditures include education, health, and defense. The data employed were derived by EUROSTAT and OECD. Based on our findings, a sole relationship of the variables was validated, while the causality of the relationship provides conflict results depending on whether two-variate or multivariate methodology is employed. In the case of the multivariate framework that outperforms the two-variate approach in terms of information, the causality is directed from government expenses to the GDP level, validating the Keynesian approach in the long run as well as in the short run. On the other hand, the results validate Wagner Law based on the results of Granger causality pairwise test. A potential interpreatation for the results found is related to the measures imposed by the Memorandum, since the disproportionate cuts of the public expenses in the period of crisis have determined the evolution of national income. The scientific value of the presents study stands on the suggestion of potential effective measures aiming at the limitation of national income shrinkage in periods of severe economic crises worldwide. Full article

New modern investment models are created to be as close as possible to real investment conditions. We consider long-term as well as arbitrary duration models with payments of interest on debt and of tax on income a few times per year (semi-annually, quarterly and monthly), which could be applied in real economic practice. Their verification will lead to the creation of a comprehensive system of adequate and correct assessment of the effectiveness of the company’s investment program and its investment strategy. One of the most important elements of calculating the effectiveness of investment projects is the assessment of the discount rate, the calculation methods of which are generalized for the real conditions of the implementation of investment projects. We consider the effectiveness of the investment project from two points of view: the equity owners and the owners of equity and debt. NPV for each of these cases is calculated by two different methods: with the separation of credit and investment flows (and thus discounting the flows using two different rates) and without such separation (with discounting of both flows using the same rate, and WACC can be chosen as the rate). Numerical calculations, conducted for four investment models (without flow separation) show that: (1) in the case of considering the effectiveness of an investment project for owners of equity capital, the increase in the number of payments of tax on income and of interest on debt p leads to a decrease in NPV: this means that the effectiveness of an investment project decreases with p; (2) in the case of considering the effectiveness of an investment project for owners of equity and debt capital, the increase in the number of payments of tax on income and of interest on debt p leads to an increase in NPV: this means that the effectiveness of an investment project increases with p. In the former case, companies should pay tax on profit and interest on debt once per year, while in the latter case, more frequent payments are profitable for the effectiveness of investment. Eight innovative investment models created in this paper can assist decision-makers in the optimal design, planning and control of company investments and the development of a company’s investment strategy. Full article

There are situations in which a monopoly solution cannot be reached. In these cases, which situation represents the maximum concentration (minimum competitive balance)? It is a relevant question, given that in sports economics, measuring the competitive balance of a league is done through normalized indices. These indices require that the maximum level of concentration be known. Until now, the distribution of results that generates the maximum level of concentration has been identified in the literature as Complete cascade distribution. However, if the scoring system used does not fulfil the stability condition, which implies that the total number of points of a championship is constant, it can be demonstrated that the Complete cascade distribution does not generate the maximum level of concentration. This is the case, for example, with major European football leagues. In this article, we constructed a perfectly unbalanced distribution, which we called a Truncated cascade distribution. This distribution generates the maximum concentration level. Therefore, if we do not use Truncated cascade distribution, there is an overestimation of the concentration measured with normalized indices. Then, the calculated competitive balance will be wrong, that is, underestimated. We provided a spreadsheet for identifying this distribution. Full article

Sustainable development has become a global catchphrase in the recent development age. This leads to the growth of various methodologies in evaluating environmental efficiency, such as the Data Envelopment Analysis (DEA) method. The purpose of this study is to propose an extended DEA model, i.e., the undesirable output model, in measuring the relative eco-efficiency scores across nations. The study collected the data of inputs, namely bad outputs and good outputs of the top 20 Asian economies in the period of 2005–2019, and then estimated the environmental efficiency of each country and classified them. The results have shown that there are four nations having higher average environmental efficiency than others. Japan is a good example of sustainable development that simultaneously balances economic development and environmental protection. The study has also discussed possible solutions for improvement to the group of nations with low environmental efficiency. Contributing to applying a novelty extended DEA model, this work recommends a more precise model, taking the weight of outputs into account for further studies. Full article

Supply chain network design problem is increasingly showing its importance, especially the perishable supply chain. This research develops a multi-objective mathematical model to design four-echelon intermodal multi-product perishable supply chain configuration in order to ensure a balance of the three pillars of sustainable development: economy, environment, and society. The optimization objective functions of the model are, respectively, minimizing costs, delivery time, emissions, and the supply-demand mismatch in time. The model addresses particular problems in the supply chain of fresh fruits, which is more challenging compared to other types of perishable products due to its seasonal characteristics. The study proposes a new approach that combines and standardizes the above objective functions into a single weighted objective function. The solution from the model supports the decision-making process at both strategic and tactical levels. Strategically, the model supports decisions about the location, size of facilities, product flows, and workforce level. Tactically, the decision variables provide information on harvest time, delivery time, the delivery route, and mode of transport. To demonstrate its practical applicability, the model is applied to Mekong Delta region, Vietnam, where a variety of fruit types, large yields, and high distribution demand in this region make designing a shared supply chain desirable for its overall economic, environmental, and social concerns. Moreover, sensitivity analysis regarding weights of different objectives is performed to assess possible changes in supply chain configurations. Application of this model to other perishable products, the addition of modes of transport, social policy, and uncertainty parameters may be suggested for future research. Full article

This paper examines the world wheat market leadership using price discovery occurring in wheat futures markets of the United States (U.S.) and Europe. An error correction model (ECM) generalized autoregressive conditional heteroskedasticity (GARCH), and semi-parametric dynamic copula methods are used for this purpose. The results indicate a positive link between U.S. and Europe price discovery which is stronger, fluctuating less after August 2010 because of a drought occurring in the Black Sea region, and then lessens, fluctuating more after 2015 with the changing wheat trade map. Furthermore, after 2015, wheat market leadership moved from the U.S. to the European market, meaning price discovery is primarily located by the Marché à Terme International de France (MATIF) futures market. Full article