The importance of impact analysis lies in its ability to gauge the economic, social and environmental effects of a program thus providing key signals and practical guidance to policymakers as well as private companies in their strategic decisions. Also, impact analysis ranks amongst the most accurate externalities’ meters and allows estimating the direct, indirect and induced impact of a programme on the local economy both during the construction and the operational period of the project evaluated. The measurement of these effects has been recently extended to environmental and social variables and has successfully expanded the realm of policy evaluation to a large number of externalities, including the provision of critical public goods.
Because of its flexibility, this type of analysis can be performed for the most diverse projects and it can be extended to every sector within the public and private universe. Because of its versatility, it can take advantage of multiple estimation techniques and methodologies. These must be chosen carefully according to the scope of the analysis, the actions to be evaluated and the economic framework to be considered both locally and in a spatially extended domain. In this respect, the objective of the OE platform presented here is to integrate several methodologies and to assist its users in finding the most fit for the purpose of evaluation. Users are also provided with models that are based on sound economic fundamentals with their construction aiming to maintain standards of prudency, robustness and fairness. The major methodologies employed by the platform include: the Social Accounting Matrix (SAM), Computable General Equilibrium Modelling (CGE), Dynamic Stochastic General Equilibrium Modelling (DSGE), Cost Benefit Analysis (CBA) and Real Options Analysis.
Social Accounting Matrix
The Social Accounting Matrix (SAM) is both a comprehensive database for national accounting, recording all the exchange flows occurred within an economy during a specific timeframe and, in its form as a coefficient matrix, the basis of a series of computable general equilibrium models (CGE).
Cost – Benefit Analysis
cost-benefit analysis (CBA), which is used to appraise an investment or policy by considering all the stakeholders that could be directly or indirectly affected. In other words, the purpose of a CBA is to determine whether a project is convenient after estimating its social welfare impact.
Computable General Equilibrium models
Computable General Equilibrium models (CGE) are among the leading tools for impact analysis. Over the past years, they have been largely recognized by multilateral and supranational institutions as rigorous and reliable programs’ evaluation instruments.
Dynamic Stochastic Gen. Eq. models
Similarly to CGE models, DSGE are used to simulate economic outcomes and for formulating practical policy advice. However, DSGE are different from CGE models because they are macroeconomic representations of the economy that attempt to reach micro-foundations.
Real Option Analysis
Real option analysis is a relatively recent innovation within the set of economic valuation techniques which is getting more and more attention as it has revolutionized entrepreneurial decision making and it has suggested a brand-new approach to investment choices.
All the models employed by Externalytics are tested with sound robustness checks which are constantly updated by our analysts in order to guarantee reliable and consistent evaluation results. Outcomes are verified both implicitly and explicitly.
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