ESCB Network on Microsimulation Modelling
The ESCB Network on Microsimulation Modelling was established to enhance the microsimulation capacity within the European System of Central Banks (ESCB). The network aims to foster cross-country collaboration on research projects and policy analyses, offering peer support and strengthening technical expertise in microsimulation modelling.
Objectives
The main objective of the ESCB Network on Microsimulation modelling is to conduct joint policy analysis and research using microsimulation models. By leveraging these models, the network can provide detailed insights into the distributional effects of various economic policies, such as tax reforms, social security changes and monetary policy adjustments. This collaborative approach allows for a better understanding of how such policies affect different population groups, thereby informing fairer and more effective policy decisions.
The network also aims to strengthen the technical expertise on microsimulation modelling within the ESCB by sharing knowledge and skills through workshops, training sessions and collaborative projects. These activities help to spread best practices and innovative methods among member institutions, ensuring that all participants can benefit from the latest advances in microsimulation techniques. By building a community of practice, the network improves the overall analytical skills across the ESCB, enabling more robust and sophisticated policy analyses.
Within the network, staff of the ECB and national central banks (NCBs) collaborate with the European Commission’s Joint Research Centre as well as centres of excellence in universities and research institutes.
Research priorities
Distributional transmission of economic policy
We quantify how inflation and fiscal and monetary policy tightening transmit to households via income, consumption, wealth and balance-sheet channels, using harmonised cross-country microsimulation and scenario analysis.
Tax benefit and compensation measures
We evaluate the distributional and welfare effects of discretionary fiscal measures and reforms (e.g. direct taxes, transfers, subsidies and indirect taxes) including the design and targeting trade-offs of compensation packages and reform options.
Revenue responsiveness, fiscal drag and behavioural tax channels
We measure how tax revenues respond to nominal income growth and policy parameters (tax elasticities and fiscal drag) and assess behavioural responses where feasible (e.g. second-earner labour supply) to inform projections and policy counterfactuals.
Structural and sectoral policy shocks
We assess household and sectoral incidence of structural policy shocks and develop comparable cross-country evidence on inflation and redistribution effects and potential mitigation policies.
Projects
Ongoing projects
Work that extends cross-country analysis of the distributional impact of the inflation surge and fiscal policy response, focusing on the unwinding of policy measures in 2023
Coordinator:
- Maria Flevotomou, Bank of Greece
- Paola de Agostini, European Commission
A microsimulation-based assessment of how the ECB’s monetary policy tightening during the inflation surge affected households’ welfare and income distribution across euro area countries
Coordinator: Mauro Mastrogiacomo, De Nederlandsche Bank
A microsimulation-based analysis of household welfare and distributional effects linked to monetary policy tightening
Coordinators:
- Nuno Vilarinho Gonçalves, European Central Bank
- Jihene Arfaoui, Deutsche Bundesbank
An assessment of inflation and redistribution impacts linked to ETS2
Coordinator: Marien Ferdinandusse, European Central Bank
An assessment of the labour market impact of second-earner taxation on marginal tax rates and labour supply
Coordinators:
- Mathias Moser, Oesterreichische Nationalbank
- Alena Harrer-Bachleitner, Oesterreichische Nationalbank
An analysis of the distributional implications of reduced VAT rates and planned reforms
Coordinator: Lara Wemans, Banco de Portugal
The DiRECT model (developed by the European Commission’s Joint Research Centre (JRC) ) is used to study sectoral responses to shocks and policies and associated distributional impacts
Coordinator: Thomas Zuber, Banque de France
Completed projects
Work that extends the analysis of the distributional impact of the inflation surge and fiscal policy response in 2022 to all EU countries
Coordinator: Maria Flevotomou, Bank of Greece
An analysis of the fiscal and distributional effects of fiscal drag, including tax elasticities by income decile and income source
Coordinator: Esteban García Miralles, Banco de España
- García-Miralles et al. (2025), “Fiscal drag in theory and in practice: a European perspective”, Working Paper Series, No 3136, European Central Bank, October
- García-Miralles et al. (2025), “Fiscal Drag in Theory and in Practice: A European Perspective”, Working Paper, No 7/2025, Latvijas Banka, October
- García-Miralles et al. (2025), “Fiscal drag in theory and practice: a European perspective”, Working Paper Research, No 483, Nationale Bank van België/Banque Nationale de Belgique, October
- García-Miralles et al. (2025), "Fiscal Drag in Theory and in Practice: A European Perspective", Working Paper, No 844, De Nederlandsche Bank, October
- García-Miralles et al. (2025), “Fiscal Drag in Theory and in Practice: A European perspective”, Working Paper, No 12192, CESifo, October
- Balladares and García-Miralles (2024), “Fiscal drag: the heterogeneous impact of inflation on personal income tax revenue”, Occasional Paper, No 2422, Banco de España, August
Analysis of the distributional and fiscal implications of the inflation surge and the policy measures adopted by euro area governments in the aftermath of the pandemic
- Amores et al. (2024), “Inflation, fiscal policy and inequality: the distributional impact of fiscal measures to compensate for consumer inflation”, Occasional Paper, No 2418, Banco de España, May
- Amores et al. (2024), “Inflation, fiscal policy and inequality”, Working Paper, No w202424, Banco de Portugal, May
- García-Miralles, E. (2023), “Support measures in the face of the energy crisis and the rise in inflation: an analysis of the cost and distributional effects of some of the measures rolled out based on their degree of targeting”, Economic Bulletin, 2023/Q1, Article 15, Banco de España
- levotomou, M. (2023), “The distributional impact of fiscal measures to compensate for consumer inflation in Greece in 2022”, Economic Bulletin, Issue 58, pp. 29-48, Bank of Greece, December
- Amores et al. (2023), “Inflation, fiscal policy and inequality: the distributional impact of fiscal measures to compensate for consumer inflation”, Occasional Paper Series, No 330, European Central Bank, October
- Amores et al. (2023), “Inflation, fiscal policy and inequality”, JRC Working Papers on Taxation and Structural Reforms, No 2023-10, Joint Research Centre, European Commission
Members
- Maximilian Freier, ECB
- Maria Flevotomou, Bank of Greece
Sara Riscado, Banco de Portugal, founding Chair, 2023-2025
- Nationale Bank van België/Banque Nationale de Belgique
- Česká národní banka
- Deutsche Bundesbank
- Eesti Pank
- Central Bank of Ireland
- Bank of Greece
- Banco de España
- Banque de France
- Banca d'Italia
- Central Bank of Cyprus
- Latvijas Banka
- Lietuvos bankas
- Banque centrale du Luxembourg
- Magyar Nemzeti Bank
- Bank Ċentrali ta' Malta/Central Bank of Malta
- De Nederlandsche Bank
- Oesterreichische Nationalbank
- Banco de Portugal
- Banka Slovenije
- Národná banka Slovenska
- European Commission Joint Research Centre
- Ifo Institute for Economic Research
- Institute for Fiscal Studies, London
- Federaal Planbureau, Brussels
Flagship publications
García-Miralles et al. (2026), “Fiscal drag in theory and in practice: A European perspective”, European Economic Review, Vol. 185
Amores et al. (2024), “Inflation, Fiscal Policy, and Inequality: The Impact of the Post‐Pandemic Price Surge and Fiscal Measures on European Households”, Review of Income and Wealth, Vol. 71, No 1
Conferences and workshops
- 17 June 2026
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Second workshop of the ESCB Network on Microsimulation Modelling, Bratislava
- 13 December 2024
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First workshop of the ESCB Network of Microsimulation Modelling, Lisbon
Contact information
For further information, just send us an email.