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A software tool for the Bayesian estimation of Heterogeneous Agent macroeconomic policy models

Project description

User-friendly modelling tool helps policymakers balance macroeconomic goals and equity

The European Green Deal seeks to ensure an economy that leaves no person or place behind. Policymakers are committed to a fair green transition. However, analysing proposed plans and balancing macroeconomic goals with their true impact on inequality and income or wealth distribution is quite complex. Easy-to-use tools are desperately needed. Funded by the European Research Council, the BASEforHANK project aims to improve the versatility and user-friendliness of its pilot software for the Bayesian estimation of heterogeneous agent macroeconomic policy models. The improved software, based on the Dynare platform for economic models, should enable policymakers globally to better understand the impacts of proposed policies for socially cohesive, sustainable and equitable growth.

Objective

My ERC-CoG project has advanced the methodological frontier in solving and estimating macroeconomic equilibrium models, enabling analysis of the interplay between business cycles and inequality. To transform this innovation into a benefit for society, policymakers must be able to work with models with ease. This will allow them to comprehend how the policies they propose impact both the macroeconomy and income/wealth distribution. For this purpose, policymakers require a software tool that allows for swift development and analysis of models. The ERC-CoG-funded research has produced a pilot software that can theoretically achieve this, alongside fundamental methodological research. However, it lacks the versatility and user-friendliness required by policymakers who must develop answers to policy questions under time pressure. The aims of the BASEforHANK project include the further development of the pilot software into a more user-friendly and versatile tool. If successful, this development will enable policymakers worldwide to understand the impacts of their policies better, resulting in more socially cohesive and stable growth. The development follows the model of the Dynare software package, which made it possible to use macroeconomic equilibrium models with representative agents that are now pervasive in policy institutions.

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Topic(s)

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HORIZON-ERC-POC - HORIZON ERC Proof of Concept Grants

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Call for proposal

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(opens in new window) ERC-2023-POC

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Host institution

RHEINISCHE FRIEDRICH-WILHELMS-UNIVERSITAT BONN
Net EU contribution

Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.

€ 150 000,00
Address
REGINA PACIS WEG 3
53113 BONN
Germany

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Region
Nordrhein-Westfalen Köln Bonn, Kreisfreie Stadt
Activity type
Higher or Secondary Education Establishments
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Total cost

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Beneficiaries (1)

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