Dynamic Modeling

A dynamic model attempts to quantify the downstream effects of a policy change throughout the economy. Legislative Council Staff (LCS) does not conduct dynamic modeling, which means that fiscal notes and other analyses are limited to the scope of legislation’s direct impacts and, in some cases, direct behavioral effects. This memorandum explains the difference between direct, behavioral, and dynamic effects of policy changes and current LCS practices in analyzing these impacts. Direct, Behavioral, and Dynamic Impacts Legislation can be said to have direct, behavioral, and dynamic fiscal impacts.