Statistical analysis and micro-simulation models are used as analytical tools to estimate tax revenues and to evaluate the impact of public policy proposals on the various decision-making units in the economy. The unit of analysis in micro-simulation models will typically be an individual, a household or a firm. For macro-based models, aggregate data such as the total consumption or imports in the economy are used, and regression analysis or other analytical tools are applied.
Both macroeconomic forecasting and micro-simulation models contribute to policy formulation by providing quantitative data on the likely effects of policy proposals. Even though the methodologies provide the policy-makers with aggregate quantitative information, that may be quite similar, each is based on a different approach. The macro-economic model approaches the problem from the perspective of the entire country’s economy, while the micro-simulation models focus on the actions or behavior of individual sectors affected by the relevant public policy.
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on Wednesday 29 March 2017
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