Question on the Calibration of Government Transfers

[daxfabella]

Good day @rickecon and @jdebacker

I wanted to clarify how government transfers as a share of GDP was calibrated in OG-PHL because it seems that the citation is missing from the documentation (link below):

https://eapd-drb.github.io/OG-PHL/content/calibration/government.html

I plan to run a simulation that increases the effective the tax rate, along with an increase in government transfers to simulate redistribution. In this context, I would like to identify the basis for the value of 0.0971 in order to simulate a well-justified increase in government transfers.

Thank you very much!

[jdebacker]

@daxfabella Great question. I see the "TODO" in the notes, but I can't trace down the original source. The ogphl.macro_params.py suggests it's from an IMF database, but I can't find a series on transfer spending there.

In the World Bank WDI data, it looks like alpha_T maybe something more like 4.4% of GDP (government expenditures are 16.9% of GDP in the latest WDI data, and "subsidies and other transfers" are 26% of that).

That said, if you have a better source, please share!

[SeaCelo]

@daxfabella @jdebacker @rickecon
The current value of 0.0971 is set in 'macro_params.py`, which includes the IMF source:

    # alpha_T, non-social security benefits as a fraction of GDP
    # can't find this specifically, so use primary expenditures minus
    # final consumption expenditures
    # source: https://www.imf.org/external/datamapper/profile/PHL
    macro_parameters["alpha_T"] = [0.2391 - 0.142]

However, the IMF changed their data portal. We need to update the source. You can still get the social expenditure data from:

1. https://www.worldbank.org/en/data/datatopics/aspire/country/philippines
2. https://data.imf.org/en/Data-Explorer?datasetUrn=IMF.STA:GFS_SOO(12.0.0)&INDICATOR=G27_T

This same issue is in the other countries.
In OG-ZAF:

    # alpha_T, non-social security benefits as a fraction of GDP
        # source: https://data.imf.org/?sk=78d0bcc1-7a8f-44eb-8a2c-d4e472b8e64b&hide_uv=1
        # alpha_T = Employment-related social benefits expense - Social security benefits expense
        macro_parameters["alpha_T"] = [0.36 - 0.0]  # 2022 = 0.36

In OG-IDN:

        # alpha_T, non-social security benefits as a fraction of GDP
        # source: https://data.imf.org/?sk=b052f0f0-c166-43b6-84fa-47cccae3e219&hide_uv=1
        macro_parameters["alpha_T"] = [0.013 - 0.0]