BICEPS/SSE Riga Research Seminar: Crossing an elephant with a butterfly: what can you learn by linking CGE model with EUROMOD

About the topic:

In this paper, we present results from linking a Computable General Equilibrium model (CGE) with a tax-benefit microsimulation model EUROMOD for Latvia. This allows utilizing the advantages of both models: assessing the agents’ heterogeneity with EUROMOD (cannot be done with a CGE model) and accounting for the indirect macroeconomic effects with the CGE model (cannot be done with a static microsimulation model). We illustrate our methodology by analyzing the macroeconomic and distributional effects of a macro shock and hypothetical tax-benefit reforms.

Konstantīns Beņkovskis is an Associate Professor at SSE Riga and an Advisor to the Monetary Policy Department at the Bank of Latvia. Konstantīns got a PhD in Economics from the University of Latvia in 2006. His current research activities focus on studies of international trade, non-price competitiveness, and global value chains. 

Anna Zasova is a research fellow at the Baltic International Centre for Economic Policy Studies (BICEPS). She holds a PhD in Economics from the University of Latvia. Her main research interests are within taxation, tax-benefit microsimulation, tax evasion, and income inequality.