Micro-econometric and Micro-Macro Linked Models: Sequential Macro-Micro Modelling with Behavioral Microsimulations

Analyzing the poverty and distributional impact of macro events requires understanding how shocks or policy changes on the macro level affect household income and consumption. It is clear that this poses a formidable task, which of course raises the question of the appropriate methodology to address such questions. This paper presents one possible approach: A sequential methodology that combines a macroeconomic model with a behavioral micro-simulation. We discuss the merits and shortcomings of this approach with a focus on developing country applications with a short to medium run time horizon. - This chapter is a re-print of: Lay, J. (2010). Sequential macro-micro modelling with behavioural microsimulations. International Journal of Microsimulation, 3(1), 24-34.