Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/300366 
Year of Publication: 
2023
Series/Report no.: 
EUROMOD Working Paper No. EM 02/23
Publisher: 
University of Essex, Institute for Social and Economic Research (ISER), Colchester
Abstract: 
In this paper, we link a CGE model with the tax-benefit microsimulation model EUROMOD for Latvia. The model linkage is done using an iterative top-down bottomup approach, ensuring the convergence of changes in disposable income, employment and wage in both models. We also incorporate the unreported wage payments in CGE and EUROMOD to account for the substantial labour tax non-compliance in Latvia and improve the modelling of the fiscal sector. Several simulations demonstrate the advantages of the joint CGE-EUROMOD system over the individual macro and microsimulation models. The lack of income distribution aspect and the scarcity of fiscal instruments in CGE can be overcome by the features of EUROMOD. The CGE model, on the other hand, provides macroeconomic spillovers that are missing in the simulations of EUROMOD.
Subjects: 
EUROMOD
CGE model
model linkage
informal sector
JEL: 
C68
D58
D90
J46
Document Type: 
Working Paper

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