{ "cells": [ { "cell_type": "markdown", "metadata": {}, "source": [ "# Simulation\n", "\n", "The unique feature of structural models compared to other econometric models is the ability to provide counterfactuals. There exist three different ways to simulate counterfactuals with **respy**. Ordered from no data to a panel data on individuals, there is:\n", "\n", "1. *n-step-ahead simulation with sampling*: The first observation of an individual is sampled from the distribution implied by the initial conditions, i.e., the distribution of observed variables or initial experiences, etc. in the first period. Then, the individuals are guided for $n$ periods by the decision rules from the solution of the model.\n", "\n", "2. *n-step-ahead simulation with data*: Take the first observation of each individual from the data and do as in 1..\n", "\n", "3. *one-step-ahead simulation*: Take the complete data and find for each observation the corresponding outcomes, e.g, choices and wages, using the decision rules from the model solution.\n", "\n", "You can find more information on initial conditions and how to express them with **respy** in the guide below." ] }, { "cell_type": "raw", "metadata": {}, "source": [ "