STRESS stands for Structural Reforms and Shadow Sector. It is medium-scale, tractable model that belongs to the DGE model family, and is solved by Dynare.

Especially since the recent crisis, there is a debate on the macroeconomic impact of structural reforms, namely, how to create jobs and boost economic growth by mitigating macro-critical structural gaps. STRESS has been designed to investigate the aggregate short- and long-run effects of labor and product market deregulation policies, in the presence of informality.

The model has been developed by Rahul Anand, Purva Khera, me and Magnus Saxegaard (all International Monetary Fund):
version #1 by Rahul and Purva is available for India (here);
version #2 by me and Magnus is available for South Africa (here).

STRESS has been/is being used in several AIV consultation cycles of the Fund:
- two selected issues papers for India (here and here);
- a box in Peru's 2017 AIV (here);
- one selected issues paper for Argentina is work in progress.

In addition, STRESS has been/is being further adopted as follows:
- Rahul, Purva and Sonali Das examined monetary policy transmission in the presence of informality in India (here);
- Purva and Volodymyr Tulin are investigating policy sequencing in India;
- with Francisco Roch and Pedro Rodriguez we are exploring policies to decrease informality in Peru;
- with Jorge Ivan Canales Kriljenko and Paolo Dudine we are studying policies to reduce informality in Argentina.

A one-pager on STRESS is available here (last updated on August 18, 2017).
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Zsuzsa Munkacsi,
Aug 18, 2017, 10:15 AM