ABSTRACT
This introduction presents an overview of the key concept discussed in the subsequent chapters of this book. The book focuses on such models moving towards increasingly comprehensive coverage of the tax-benefit system, inter-country comparison and improved modelling of behavioural responses to changes in tax and benefit rates. The first is the static cross-sectional tax-benefit calculator, which allows assessment of the distributional impacts of changes in state fiscal and welfare policies at a given point in time. The second is the dynamic model, in which population characteristics are projected forwards through a process of regular updating of the characteristics of the individuals within the model. Third is the micro-macro model, which uses outputs from micro-simulation models as inputs to macro-economic models and vice versa, in order to better capture the interplay between individual behaviours and the macro-economic environment within which they operate. Spatial Microsimulation is a fast-growing modelling technique used to develop synthetic datasets describing household characteristics at local level.
