Is Fiscal Policy the Answer?

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Household surveys, expenditure and revenue data, basic understanding of the fiscal system

TBM software, programmed or available; household surveys and (ideally) administrative data

Social accounting matrix, CGE, sectoral data (for example, on education), macroeconomic sustainable framework, microsimulation model

TBM

CGE

Detailed profile of winners and losers in a fiscal policy reform or anticrisis intervention

Fiscal policies to reduce distributive gaps in the face of a crisis; also, the growth and efficiency implications of fiscal policies adopted to confront the effects of the crisis

Minimum data requirements

Incidence analysis

Suggested analysis

“Quick-and-dirty” snapshots of the magnitude of distributive impacts of fiscal structure

Main requirements of the demand for analytical assistance

1. Model the determinants of distributive or sectoral gaps. 2. Model the economy, ensuring fiscal links between sectors and macro aggregates. 3. Decide whether to use a microsimulation model or a simple representative distributive analysis. 4. If necessary, expand the analysis to specific issues: direct versus indirect effects, transmission channels, projections into the future, and so forth.

1. Make sure there are readily available household survey/surveys and expenditure data at national and subnational levels to conduct the impact analysis. 2. Apply the simplest methodological version of the analysis as core work. 3. Expand analysis to cover additional issues such as gender, ethnic disparities, central versus regional decisions, and regional aspects. 1. Invest up front in the construction of the TBM software. 2. Think carefully about what kind of behavior (if any) must be included in the analysis.

How to start

Table 5.2 Decision-Making Guide for Choosing the Appropriate Analytical Tool during a Crisis

Crisis relevance

Critical to adopt and High initial assess measures investment, but relatively low maintenance cost when the model is constructed Critical for palliative Medium to high responses to the initial investments estimated/ (depending on decisions on macro- expected effects of the crisis micro integration, existence of social accounting matrix, modeling decisions) and medium maintenance costs

Low initial investment Very relevant as a and low minimum or maintenance cost starting point

Capacity-building potential


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