Simulation Techniques to Understand the Potential Impacts of a Crisis: Macro-Micro Models and Micro-Accounting Methodologies
Simulation techniques use economic and behavioural models to assess the potential impact of economic and policy changes on different outcome variables (for example, child poverty, nutrition, child work, school attendance). They are important tools to support an ex-ante understanding of the potential impacts of policies and economic changes, as well as the potential consequences of economic shocks and crises when actual data are not readily available.
Macro-micro models are analytical tools that help simulate the possible impacts of macro shocks and policies, on economic variables such as wage rates, employment, food and non-food prices and the transmission of these impacts on different outcomes at the micro level (for example on different child well-being indicators). In analysing the full implications of economic crises and policy shifts, these types of tools are best equipped to reflect the structural aspects of the economy and capture the numerous and complex direct and indirect interactions across different actors in the economy, including those related to factor markets, goods markets, households, government, private firms and foreign partners.
On the other hand, micro-accounting methodologies differ from macro-micro simulation models, since the former do not explicitly model crisis transmission from the global to the national setting. Instead, this approach draws on a country’s disaggregated data, particularly on income, consumption and access to transfers, to illustrate the distributional impact of a crisis or policy reform. These tools are less time-, data- and resource-intensive than macro-micro models, but can provide an early and timely analysis of potential social outcomes from macro shocks.
This section features key research initiatives that use these simulation methodologies.
- The Impact of the Food and Financial Crises on Child Mortality in Sub-Saharan Africa (2011)
- Ex-ante Analysis of the Impact of Proposed Taxation Changes on Vulnerable Children and Families in Serbia (2010)
- The Impact of the Financial Crisis on Child Poverty in South Africa (2010)