Eco&Stat N°08-2026 - Exploratory study on the combination of micro- and macro-simulation models in the case of Luxembourg

Since the pioneering work, notably that of François Bourguignon from the late 1980s onwards, the combination of microsimulation and macroeconomic models has given rise to a growing number of publications. Empirical applications are developing particularly in the fields of fiscal and trade policy, climate change, poverty reduction and structural reforms. Whilst computable general equilibrium (CGE) models are widely favoured for this type of analysis, estimated macro-econometric models are used much less frequently. This study combines ‘Modux’, a macro-econometric model developed by STATEC, with ‘SPAFIL’, a microsimulation model developed by the IGSS. Both tools have been widely used for forecasting and/or analysing public policies, but never before in the context of combined simulations. The aim of this study is therefore to link the two models and generate two common hypothetical shocks: a reduction in household taxes and a decline in financial sector activity. The shocks are simulated iteratively, with a set of relevant variables being exported sequentially in both directions. The two models are simulated with the aim of achieving convergence of their respective solutions. The main results consist of a macroeconomic trajectory that differs from the initial baseline, integrated into SPAFIL, and the inclusion of distributional effects relating to households in Modux. The latter can also alter – sometimes substantially – the macroeconomic outcome and, in particular, the Keynesian multiplier.