Models & methods
Not every question needs the same framework. These are the families of methods behind our work — often combined in one engagement.
What is an economic model
An economic model is a structured representation of how economic variables interact, written in logical or mathematical form. It simplifies a complex reality just enough to reason about it — under assumptions and constraints that are stated openly and can be changed to test different outcomes.
Every model separates what it explains from what it takes as given. Exogenous variables — such as world prices, population, interest rates or public spending — are set from outside. Endogenous variables — such as income, consumption, investment and imports — are determined by the model’s own equations.
Why models matter
01
Projections that follow transparently from clearly defined assumptions.
02
Describe the rules that shape how households, firms and government respond to change.
03
A sound rationale for economic policies — at national, institutional and household level.
04
Set targets and distribute limited resources across sectors and programmes.
05
Anticipate demand, prices and returns before committing to trade or investment decisions.
06
Compare policy packages and scenarios on evidence before any of them is implemented.
The model landscape
Simple theoretical models isolate one relationship, holding all else equal (ceteris paribus). Applied models combine many relationships and real data to answer concrete policy questions.
The building blocks of macroeconomic thinking.
Our methods
01
Economy-wide models calibrated to a Social Accounting Matrix. They capture how industries, households, government and the rest of the world interact, so a policy change in one place shows up everywhere it matters.
02
A consistent projection of where the economy is heading under current policies — the reference point every scenario is measured against. We combine macro-econometric relationships with the structure of the national accounts.
03
Statistical estimation of the relationships that drive a market or an economy — demand, prices, trade flows, productivity — using time series and panel data. It grounds models and forecasts in evidence.
04
Household-level models built on survey data that translate a policy into gains and losses for real households — by income group, region and household type.
05
Project-level models that compare costs and benefits over the life of an investment — financially for the investor and economically for society — with full sensitivity and risk analysis.
Inside a national model
A national system-dynamics CGE model is organised in blocks that are solved together. Prices, demand, production, employment and investment all respond to each other — and policy levers act on the whole system.
Price block
Producer prices
by productive sector · 26
→
Consumer prices
by productive sector · 26
→
Final-demand prices
consumption, investment, exports · 64
Demand, production & employment
Private consumption
by spending category · 15
Exports
oil, gas, petrochemicals, crops, software, manufactures… · 8
→
Imports & sectoral GDP · Employment & wages
56 · 98
⇄
Fixed capital formation
by asset type · 7
Policy levers acting on the system
Numbers show the size of each block in one national planning model. Each block is a set of estimated equations — for example, producer prices respond to wage costs, indirect taxes and subsidies.
Data foundations
A model is only as good as the data behind it. We build on official national statistics, complemented by international sources for the global environment.
The modelling cycle
01
02
03
04
Platforms & tools
Economic models run on specialised software. We work across the established modelling platforms and programming languages, and build our own applications where they make models easier to use.
Modelling platforms
Programming
Our applications
Scenario lab
Pick a policy, change its size and the time horizon, and watch the economy’s path move against the baseline. Some reforms cost before they pay — that trade-off is exactly what our CGE work quantifies, with real data, for real decisions.
Scenario controls
Choose a policy, set its size and the time horizon. The path compares the economy with and without the policy.
Construction demand lifts output quickly; the new capital stock raises productive capacity over time.
INDEX · BASELINE YEAR 0 = 100
Illustrative demonstration with stylised coefficients. In a real engagement the scenario is run on a CGE model calibrated to national accounts and a Social Accounting Matrix.
The next conversation
Tell us about the decision in front of you. We will come back with how we would approach it — the questions, the data and the method.
