Working Paper Series, Department of Economics, Uppsala University
N. Anders Klevmarken
Behavioral Modeling in Micro Simulation Models. A Survey
Abstract: Micro-simulation is an approach to analyze the impact of
economic and social policy on the distribution of target variables, not
just on the means. It easily includes the true policy instruments and
handles highly nonlinear relations. Most models currently used in policy
analysis are static and they do not include behavioral response to policy
changes, just their first order effects. There is, however, an increasing
demand for dynamic models including behavioral responses. This paper
surveys current theory and practice in micro-simulation with an emphasis on
behavioral modeling, and discusses issues of model building, data
availability, estimation, testing and validation.
53 pp., 1997
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