Microsimulation is an analytical tool that uses basic or individual information known as microdata - obtained via sampling investigation or administrative databanks - on analysis units (individuals, households, businesses, vehicles). The relation between the analysis units is regulated by rules that, on the whole, define a scenario or a public policy (for example vehicle traffic flowing or a tax-benefit system).

The purpose of microsimulation is that of analysing and measuring the effects on relevant outcomes following the modification of the rules enforced for the analysis unit (public policy) or the occurrence of an event.

Tax-benefit microsimulation is generally used to quantify the effects on income distribution and on tax revenue generated by changes to fiscal, contributory, support and transfer schemes and policies.

Microsimulation is also used to analyse vehicle traffic flows, but it can generally be applied to any investigation into the complex rules that may be applied to specific, individual situations.

There are three types of tax-benefit simulation models: static, dynamic and behavioural. Static models study the effects of a change to the rules, maintaining unvaried the characteristics of the analysis units. Dynamic models, on the other hand, take into account the variations that relevant social and demographic events (for example, ageing) may produce on the units, especially in the long run, hence dynamically updating the features of the units themselves. Behavioural models also zero-in on the changes in an individual's behaviour (indirect effects) induced by modifications to the rules (for example a greater consumption or the replacement of specific goods and services following a change in taxation, which affects the price).

In order for a microsimulation to generate reliable assessments - for instance, in terms of tax revenue and income distribution - all data must be representative of the studied population: either owing to the census-based nature of the data, to the gathering of a sample that is itself representative, or to the use of samples weighted to the universe.

Monitoring is the systematic collection of information (primarily quantitative) on the implementation of a public policy. The aim is to maintain awareness of, and consequently to account to citizens, control bodies, funding providers, etc. for, the resources used and measures implemented. Monitoring activity can be distinguished from pure evaluation activity (specifically, evaluation in the course of the intervention) by the different cognitive approach adopted. Although the monitoring data provide the raw material for any subsequent analysis and evaluation of the intervention, they are used for mere reporting, with a view to transparency, of the use of the resources allocated to the policy.

Sources:

- La Spina A. and Espa E., Analisi e valutazione delle politiche pubbliche, Bologna 2011, p. 208 et seq.;

- World Bank, Impact Evaluation in Practice, Washington 2011, p. 232;

- ASVAPP slides on Monitoring (Barbara Romano) as part of her Master's. ?? check italics??