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Macroabc and Micromacrosim

>> Macroabc methodology

>>Micromacrosim methodology


In collaboration with local economists Micromacro Consultants (MMC) has built macroabc economic models and poverty modules in Curaçao, Aruba, Netherlands, Suriname, Indonesia, Bhutan, Kenya, Zambia, Rwanda, Country X, and some ten other countries.

Use of the model:
The model can be used for:

a)      Training and research how the economy of  the country, with special attention to poverty reduction

b)      Fiscal and socio-economic policy simulations of scenarios (what if/ impact analysis).

c)      Regularly updates, new baseline and scenarios with new output tables for Budget paper, medium term poverty reduction paper, long term Vision paper, tables to prepare IMF visits.

d)     And macroabc even be helpful the production of tables for those reports.

Please note that most macroabc models do have a complementary poverty module that translates macro economic developments combined with data from Household Surveys into change in share of the households below the poverty line

In most countries the model has been used as a tool for training in better understanding how the economy works, in some countries also for what if policy simulations, and in some countries for some time also to produce Outlook etc. Because of labour mobility in case there is no maintenance and training of new staff, the models become sometimes ‘’sleeping’’ till a new team makes a fresh start.  

What kind of framework or model is Macroabc?

Macroabc is a structural macroeconomic model. You can see it as a streamlined version of the macro models as are already starting in 1947 in use at CPB Netherlands. Or you can see it as a Financial Programming framework, but with three additional things compared to FP frameworks: 

a)  Explicitly statistical discrepancies in case of a variable that has different values in different sectoral tables. Definition relations for (sub) totals and deficit variables,

b) A household sector  with employment data from Household Surveys, and a complementary poverty module,

c) Behavioral equations that include the role of incentives (cost price, productivity).

Because of that it is more then a framework, it is a model that also can be used for what if simulations and scenarios.

Macroabc has many sheets, but most are output sheets. The most important sheet is just one: sheet Model. It uses data from Source and Assumptions sheet and results are used in several output sheets.

The conceptual structure is quite clear: the model is organized in sectors: Real, External, Fiscal, Monetary and Households. Each sector revenues, expenditures and residual. Because all sectors are linked, if you change one variable in one sector, all variables, also in other sectors, can change.

For those who are familiar with Financial Programming, need to know that Macroabc is full of definition relations and behavioral equations. Each macroabc model has a Manual  with full documentation.

The model is simultaneous, but can nevertheless run in Excel (set circularity allowed on).

The model are home-grown in most countries, because after construction of a demo version by the consultants, it was made step by step through the hands of the local the participants in workshops in the country and in Netherlands.

 The model can also produces estimates of GDP to sectors of industry by using a CPS matrix, see sheet Sectorsabc.

 The model requires assumptions as input, like exports, agricultural productivity, oil price, fiscal policy measures (effect in mln. Of local currency to economic classification of revenues and expenditures), population growth.

 The main behavioral equations are discussed in sheet Manual. Please note that the model is not only demand driven. The supply side is very important and is there through the competitiveness in the export equation. So the mean driving factor for economic growth is decrease of cost prices thanks to increase of productivity and decrease of taxes. 


The macroabc model is an auxiliary for better understanding of the links in and between sectors of the economy. But please notice that Economic science is not developed so far that we know exactly how the economy works, so the data are simply estimates. There is no model in the world to proof exactly how policy measures will, via several channels, affect GDP, BOP, Fiscal sector and poverty. But one can try to construct a macroabc model and poverty module that reflect the economy of a specific country as good as possible to get an idea of how the policies would affect fiscal, economic and poverty targets.

Model training projects

The success of the macroabc model projects results from the combination of the telework approach, involvement of local economists and the Macroabc methodology, originally developed in the Netherlands and then enriched with the experience of economists in South America and Caribbean, Europe, Africa and Asia.

You can also download as shareware the models:

  • Curalyse (Macroabc model for Curaçao partly in English and Dutch) 
  • Antillyse (Macroabc model for Netherlands Antilles partly in English and Dutch) 
  • Macroabc-NL (in Dutch) 
  • Macroabc-Macedonia (testversion for demonstration purposes) 
  • MicromacroSimDemo (test version applied to Kenya
  • Antiltax(Micromacrosim applied to Curaçao partly in English and Dutch)
  • Macroabc_UN_Country X
  • Macroabc_Bhutan (demo version)

As an introduction we recommend to go into Macroabc_UN_Country X, go trough the sheets and study sheet Manual.

Macroabc model for new country?

Actually, just using macro data from Art.IV mission report of IMF and the data from Households Surveys as promoted by WB, MMC can produce within 3 month a running demo macroabc model for each country in the world that has complete National Accounts in running and constant prices on Internet. We did that already for Bhutan and Grenada. (In the last case together with my partner in Curaçao you can download Grenada macroabc on  www.calmera.nl).

And in collaboration with KIPPRA Kenya we do that now for Mozambique.

 The Macroabc models are kept as simple as possible in order to make them easy to handle. But not that simple: all relationships are included that are relevant for the country involved and the main user. That means that for example Macroabc models developed for a Ministry of Finance will have a lot of detail concerning the government sector in the model. Actually, Macroabc models for different countries differ a lot, so the name Macroabc changed from the name of a

model to the name of a methodology how to construct macro models

Telework Approach and Macroabc Methodology of MMC.

Macroabc started as the name of a model for the Netherlands, and other countries, but even more it became a method how to construct models in co-operation with counterparts.

MMC developed its own efficient mix of co‑operation and training. It tries to reduce the psychological and intellectual distance one so often sees between a consultant and his counterpart. In this mix, the three spearheads of MMC's methodology each have their proper place:

  1. Practical training in macro-economic modelling for policy analysis of market economies.

MMC offers tailor-made programs of one to four years for the post graduate training in applied macroeconomic analysis and policy. Theory and discussions in workshops are supplemented by practical exercises. Actually the main activity of the project is to (re)build a macro economic model of the country in co-operation between counterparts, short term MMC consultants and sometimes also local or regional consultants. During this exercise it will apparently becomes clear which elements of macro model building and use of such model in practice of policy preparation (base line for the budget and policy variants) are not yet understood in practice and MMC consultants provides knowledge and practical training for those elements. These exercises are built around a compact and understandable model of the economy which was specifically designed for training purposes.

We start to build as soon as possible a preliminary version of the Macroabc model of the country, using another Macroabc model, for example the Macroabc_UN_X.xls an example. We feed that with data and preliminary coefficients, also using information from already available macro economic studies of the countries involved. That helps us to communicate what kind of macro model is needed and is feasible. 
Then we restart the model building process again from the beginning together with the local economists. So the preliminary version of the model will be elaborated and enlarged in order to highlight a particular issue of concern to the counterpart. Moreover, the model building process is designed so that the counterpart can be an active participant in the process, either by seeing the adjustments being made during the discussions, or by performing them himself. In this way his interest and involvement in the project is assured, and the alienation that so often marks the activity of outsiders in Technical Assistance projects is avoided. Stand-by service by e-mail throughout the project and a clear and understandable documentation is a standard part of MMC's service. Very important is our telework approach: we combine:

  • Short visits of MMC consultants to the country
  • Short visits of counterparts to the Netherlands with every morning a workshop of another specialist (much cheaper and more effective than bringing all the time so many experts to the country involved)
  • Communication via email and Skype in between the visits, and preparation of  model improvements and training material and preparation of the visits.
  1. Support of specialists in model construction and quantitative economic analysis.

During the process of constructing a macro model of the country all the time special challenges arise: each country has its own peculiarities so the prototype of the Macroabc model needs to be adapted. This needs special analysis and research, to be executed by the counterparts with support of  MMC consultants that are specialized in the subject. MMC's experts pool makes it the ideal partner for applied quantitative analysis and economic modeling studies. The methodology of MMC successfully avoids the trap of splendid isolation and working in a vacuum, in which many research projects get entangled. Instead, it actively fosters the dialogue between researcher and counterpart. Moreover an important part of the work will be done by the counterparts itself. This is the only way that they really learn to master the model. The success during already eight years shows that MMC's methodology works.

  1. A flexible prototype model: Macroabc.

In each new Macroabc project we use one or more already existing Macroabc models as a  prototype. MMC also has designed special training materials like study modules as a central element of the special methodology of MMC. Counterparts that master their Macroabc model may be use it for analyzing the effect of macro-economic policy, for historical simulations, for short and medium term forecasting as base lines for Government Budget, Poverty Reduction Strategy Paper, Development Plan, Outlook and for the construction of long term scenarios. The Macroabc models have a clear basic structure, and also enough flexibility to be adjusted to suit the issues to be addressed.  Prerequisites for handling the model are knowledge of macro Economics and statistics and familiarity with spreadsheet software on the PC. The availability of some Macroabc models as shareware on the internet enables interested parties to see its powerful performance. It is part of MMC's open‑minded policy to supply interested internet users with the necessary information to assess the model's performance for themselves. The success of the projects in Suriname, Curaçao, Poland, Indonesia, Ethiopia, Aruba, Netherlands, Kenya and Zambia  and other countries shows again that the formula works.

MicromacroSim: poverty module

MMC and its pool of short term consultants has not only expertise in macro economics, but is also specialized in the use of micro data bases for  gross and net income analysis and the simulation of number of people below the poverty line. For example MMC developed the Microtax model of CPB of the Netherlands further into the MicromacroSim module, it has constructed a wage bill and net income simulation model for the Ministry of Education of the Netherlands, and used big micro databases to analyze the wage drift in several sectors. The macro and micro knowledge of MMC could be also very interesting to contribute in the construction and monitoring of Poverty Reduction Strategy Papers. MMC could especially contribute to bridge the gap between macro economic growth & micro poverty analysis and monitoring by construction of a combined macro and micro model, starting with a combination of a Macroabc model and MicromacroSim module. 

There are a number of ways in which you can get acquainted with MicromacroSim:

MMC did build a demonstration version of MicromacroSim. In this version a MicromacroSim model is made that uses Kenyan statistical data. It is a preliminary version that has as a goal to give an idea of the possibilities with MicromacroSim.

In the Manual a detailed description of the methodology and the demonstration version can be found. This Manual also contains the description of some variants. Being able to analyze the effects of variants on poverty and purchasing power is one of the strengths of MicromacroSim.
In order to give you a visual impression of MicromacroSim MMC put two slide shows on the internet.
The first gives a short introduction to the different sheets in the demonstration version.
The second explains how a variant can be run with the demonstration version.

MicromacroSimulator Abstract

In the light of the global interest in the reduction of poverty and the accompanying need for an instrument to measure the effects of macro-economic policy on poverty MMC developed the MicromacroSim methodology. This methodology is an auxiliary in the translation of macroeconomic forecasts and simulations into microeconomic information about the number of people below the poverty line and the purchasing power of different groups in society. This allows the user to analyze the effect of macroeconomic developments and policy on the poverty level. The optional inclusion of information of the tax system would make it possible to assess how a changing macro-economic environment or policy changes will influence the tax revenue. This can help in the construction of budget-neutral (without a loss or gain in tax revenue) policies.

MicromacroSim is most powerful if it is used as a module to a Macroabc model. In this case the program uses the consistent forecasts of the Macroabc models in its analyses of poverty and purchasing power in future years. Just like most Macroabc models MicromacroSim runs in Excel and is therefore easy to work with. The running of variant analyses can therefore be done by everyone with a little knowledge of Excel. This is interesting because one of the strengths of MicromacroSim lies in its usefulness in simulation analysis. A large number of simulations are possible with this program, it can be used to assess the effects on poverty, purchasing power and tax revenue of:

  • Changes in the inflation rate 
  • Changes in the income growth in different sectors (private, government, informal and traditional)
  • Changes in the employment rate in those sectors 
  • Tax reforms (indirect tax, income tax) 
  • Adjustment of the poverty line 
  • A combination of any of the above 

Next to this the program can be used for a historical review of purchasing power and poverty.

The charm of MicromacroSim is that it can be used for a broad range of political and economic analysis. Therefore the program can be applied to meet the needs of many different countries. Up till now the MicromacroSim has been adapted to function for different purposes in the following models:

  1. The tax-model for Curacao called Antiltax (downloadable on www.micromacroconsultants.com), 
  2. The Suritax model for Suriname (including a poverty module), 
  3. A program that MMC built for the ministry of Education, Science and Culture of the Netherlands
  4. A calculation sheet used for a research in the Dutch health sector, 
  5. The Bontax model for Bonaire and 
  6. MicromacroSimDemo, this program has been developed by Drs. Bas van Tuijl and Dr. Marein van Schaaijk in 2002.
  7. Poverty modules in the following Macroabc models for: Kenya, Indonesia, Zambia, Rwanda, Country X, Bhutan

See in the sheets Manual in the shareware versions for Country_X or Bhutan on this homepage.

The general structure of this program is summarized in the following section:

From Macroabc model or statistics for the past and assumptions for the future
Data on gross income levels and the level of the labor force for

  • Employees private sector
  • Employees government sector 
  • The informal sector 
  • The traditional sector 
  • Consumer prices

And on a micro-economic level

  • A recent income distribution within the sectors 
  • Information about the tax system, rates and brackets 
  • If relevant, information about the social security system


  • Calculation of the gross net-real income for each of the five categories, and within each categorie 5 or 7 income classes.
  • Calculation of numbers below the poverty line in different years 
  • Calculation of total income and total tax revenue


  • Real net income growth for the average income earner in the private, government, informal and traditional sector 
  • Numbers below the poverty line

The methodology of Macroabc and MicromacroSim provides an instrument to analyze and forecast the effects of macro and tax policy changes.