Tax-benefit models are powerful tools for the analysis of the impact of policy reform, in regular use around the world in government and research organisations. This study focuses on one particular model, POLIMOD and provides a comprehensive assessment of its theory and workings.

Tax-benefit models are powerful tools for the analysis of the impact of policy reform, in regular use around the world in government and research organisations. This study focuses on the particular model, POLIMOD, and performs three tasks. It provides an illustration of the type of analysis that can be performed, and demonstrates the sensitivity of results to some of the key assumptions that are made. It steps inside POLIMOD and documents some of the inner layers of data manipulation and model construction that drive its outputs. And it provides a detailed assessment of the reliability of those outputs based on a validation against external sources.