MDCEV Forecasting alpha-profile
Posted: 12 Mar 2024, 08:04
Hi,
I am trying to implement MDCEV forecasting into my activity model and I've been using the forecasting algorithm proposed by Pinjari and Bhat (2011). I don't know if I'm missing something, but the formulation in that paper does not allow for forecasting using an alpha-profile, i.e. where alpha values are different for each alternative.
Now Apollo lets us define an alpha-profile and forecast based on the estimated parameters. How did you circumvent the issue of the forecasting issue?
I did take a look at what's implemented in apollo_mdcev (I am looking at the outside good case):
It looks like alpha_0 is used when calcluating lambda, and alpha_k are then only used once the consumption is calculated. Do you have a paper that provides more background on the reasoning behind this?
Thank you!
Anna
I am trying to implement MDCEV forecasting into my activity model and I've been using the forecasting algorithm proposed by Pinjari and Bhat (2011). I don't know if I'm missing something, but the formulation in that paper does not allow for forecasting using an alpha-profile, i.e. where alpha values are different for each alternative.
Now Apollo lets us define an alpha-profile and forecast based on the estimated parameters. How did you circumvent the issue of the forecasting issue?
I did take a look at what's implemented in apollo_mdcev (I am looking at the outside good case):
Code: Select all
while (!stopping) {
use = orderofV < M
lambda_1 = b + sum(p * g * use)
lambda_21 = ph0^(1/(1 - a0))
lambda_22 = sum(p * g * use * phk^(1/(1 - a0)))
lambda_2 = lambda_21 + lambda_22
lambda = (lambda_1/lambda_2)^(a0 - 1)
if (M > sum(phk > lambda) || M > sum(phk > 0)) {
x0_1 = lambda_21 * lambda_1
Xintra[i, 1] = Xintra[i, 1] + x0_1/lambda_2
xk_1 = phk^(1/(1 - ak)) * lambda_1
Xintra[i, 2:s$nAlt] = Xintra[i, 2:s$nAlt] + use * (xk_1/lambda_2 - 1) * g
stopping = TRUE
}Thank you!
Anna