Engendering Fiscal Space: Modelling Alternative Methods of Financing Investment for Gender Equality

Using a framework to analyse the macroeconomic and microeconomic impacts of policies aimed at enhancing gender equality, we propose an alternative model of financing investments for gender equality. The policy initiatives are distinguished by their specific goals and methods of financing. A fully articulated stock-flow consistent post-Keynesian macroeconomic model is sketched to track the changes in flows of income and expenditures as well as changes in assets and liabilities. Our model is multisectoral (e.g. it can include capitalist mining and non-capitalist agriculture) and encompasses major institutions of the economy, such as businesses and households. The microeconomic impacts of the changes in macroeconomic conditions are captured via a microsimulation model that does not rely on assumptions of utility-maximizing behaviour. Individual outcomes are determined via a computational method (“hot-decking”) that uses a representative sample of the entire population (rather than a few representative agents). The model delivers the statistically most likely results based on the diverse constraints and opportunities of the individuals. In addition to labour market effects, we also model the impacts on unpaid household production activities. Distributional outcomes for population subgroups (including intra and intergroup inequality) can be assessed with the model using standard measures such as earnings and family income. Because we model household production, the impacts on measures of economic well-being and poverty that incorporate household production can also be evaluated.