Modeling the Impact of Domestic Policies and Global Shocks

There is an increasing demand to evaluate country level impacts of domestic policies and shocks to the world economy. However, the models used to assess these impacts are often complex; requiring substantial training to use. This user-friendly interface enables users to run their own (simple) policy scenarios & visualise results using the same type of models used for in-depth impact assessment. A user guide is available here.

The interface uses a national Computable General Equilibrium (CGE) model, STAGE 1 (McDonald, 2007), calibrated to a Social Accounting Matrix (SAM) for South Africa. A CGE model is a whole economy model based on economic theory, populated with real economic data which depicts an economy in a given year. The model is a deterministic system of equations which represents the behaviour of firms, households, and governments. CGE models can be used to assess impacts of a range of policies on economic variables. The model used here is run in comparative static mode, allowing for a comparison of the state of the economy before and after a policy change or change in world economic conditions.

The model and user interface are licenced under Creative Commons BY. For detailed background information about the model, you can find the technical documentation here. Online training in the model is available here. For enquiries related to the content of the user interface, contact Lindsay Shutes at Elevate Economics. For MIRO specific and technical questions contact GAMS Software GmbH.

Disclaimer: The material and information contained in the user interface is for general information purposes only. The proprietors accept no liability for consequences arising from the use of the interface or data and models therein. Any reliance placed on such material is therefore strictly at the user’s own risk.

Quick start

Input

• Define domestic policies and global shocks by changing slider values in the input tabs.
  • 'World prices' tab: Scenarios to examine the impact of changes in world prices.
  • 'Tax policy' tab: Scenarios to examine the impact of changing tax rates
• 'Assumptions' tab: Specify how government maintains fixed spending commitments when government revenues change
• 'South Africa SAM' tab: Pivot table that shows the South Africa Social Accounting Matrix. The pivot table has pre-defined views that can be browsed.
• 'Expenditure/Income shares South Africa SAM' tabs: Pivot tables that show expenditure/income shares. The pivot tables have pre-defined views that can be browsed.

Output

The output section contains a dashboard of results arising from the last scenario run in – or loaded into the interface. The dashboard is navigated via the ‘tiles’ on the right-hand side of the screen. The tiles show headline results for the current scenario. A html report with selected results can be exported.

Scenario Comparison

Load saved scenarios via the 'Load scenarios' section. Choose which scenarios you want to include, click 'Choose selected scenarios' and then 'Dashboard compare'.

Note that if you use the app in the MIRO gallery, your scenarios will be deleted after closing the app.

Explore further

The user interface allows for ‘what-if’ type analysis. Additional scenarios can easily be run to evaluate other scenarios under alternative assumptions such as different magnitudes of tax policy and/or world price changes, and alternative government financing options. Multiple scenarios can also be run to decompose the observed impacts; e.g., an initial scenario in which all import prices rise by 10% could be decomposed into a 10% rise in the import price of each commodity group separately, thus identifying the main drivers of the impacts.

The Social Accounting Matrix

The following table shows the SAM and the Behavioural Relationships in detail:

Glossary

World price changes

Social Accounting Matrix

Government financing

Additional government revenue comes from government borrowing or raising the income tax rate.

Macroeconomic indicators (nominal)

Activity groups

Factors

Land, Capital, and Labour grouped by ethnicity (African, Coloured and Asian, White) and skill type (unskilled, skilled)

Households

Households grouped by ethnicity (African, Coloured and Asian, White) and education level (low, mid, high)

Government indicators