Information Bureau - The Model

The Virtual Economy model has been developed by the Institute for Fiscal Studies in co-operation with the Macro-Economic Modelling Centre at Warwick University. It is based very closely on the model used by HM Treasury. There are further details available on how this work was done and the assumptions that the model uses in the model technical support section on the 4th floor. The model is a sophisticated online model of the economy that enables users to make a variety of changes and see their effects at both a macro and micro-level.

There are two different forms you can use to input changes to the model. When you go to the model floor you will be offered a choice between the selected variables input or the all variables input. The selected variables form has the main policy tools (income tax, VAT, interest rates and government expenditure) but none of the more detailed changes possible. The all variables form allows you to change tax allowances, bands, benefits and so on as well.

To get to the model itself from anywhere in the Virtual Economy, you can simply click on 'model' in the navigation bar at the top of each page or select the 4th floor from the side panel. Alternatively, you can follow the link below.

There is also a teachers' guide and a students' guide to the Virtual Economy available. This gives full details of all the resources available and where they can be found. The students guide shows how the Virtual Economy may be useful for your particular course.