Using microsimulation models for revenue forecasting in developing countries

The use of microsimulation models for revenue forecasting in developing countries is addressed and contrasted to some of the alternative forecasting techniques. Given the problems of many of the alternative techniques, microsimulation models are often found to be the preferred revenue estimation method. The microsimulation revenue estimation is illustrated with data for the Jamaican personal income tax. Details for the example related to the data requirements, problems, and the necessary assumptions for obtaining revenue estimates are discussed and several alternate tax policy changes are simulated and presented.