The purpose of this project is to develop an Overlapping Generations model which, in combination with the EUROMOD microsimulation model and by extending it with the modelling of the macro-economic environment, will allow the analysis of second round and inter-temporal effects of policy reforms.
The OLG model will allow contributing to the research on the interaction between tax policy and public spending, by providing a cross-country modelling of fiscal policy in an inter-temporal framework.
An initial version of this OLG model was developed in GAMS but now it is being extended to Python. The final model will include the following aspects: multi-period lived agents, endogenous labour supply, actual demographic trends, unbalanced government budget constraint, tax and public expenditures functions.
The distinctive characteristic of the target OLG model will be its calibration to micro characteristics of individuals, including different labour skills, by age and income quantiles as well as individual tax functions.