STRESS stands for Structural Reforms and Shadow Sector. It is medium-scale dynamic general equilibrium model which is solved by Matlab and Dynare.

Especially since the recent crisis, there has been a debate on the macroeconomic impact of structural reforms. STRESS is a tool to explore the aggregate short- and long-run effects of labor and product market deregulation, in the presence of informality.

The model has been developed by Rahul Anand, Purva Khera, me (all International Monetary Fund), and Magnus Saxegaard (Ministry of Finance, Norway):
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 cycles of the Fund:
- two selected issues papers for India (here and here);
- a box in Peru's 2017 AIV (here);
- a selected issues paper for Argentina (here).

In addition, STRESS has been/is being further adopted:
- 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 labor 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 October 23, 2017).
Zsuzsa Munkacsi,
Oct 23, 2017, 1:20 PM