Bridging Macro and Micro: A Tribute to Graham Pyatt’s Contributions to Distributional Analysis

This paper honors Graham Pyatt’s contributions to distributional analysis and his pioneering quantitative methodology that integrates macroeconomic and microeconomic approaches. Bridging macro- and microeconomic models to understand the incidence of macroeconomic shocks and policies or the aggregate impacts of scaling up micro interventions is crucial in today’s politically polarized context. Obstacles to this integration, including data limitations, differing theoretical foundations, and professional silos, are identified, and methodological approaches to linking macro and micro models, organized by model nature – static or dynamic, perfect competition or market imperfections – and linkage methods: top-down, bottom-up, or looping are reviewed. The Global Income Distribution Dynamics model is highlighted as an advanced dynamic microsimulation model. Two examples illustrate the practical applications of these methodologies: the impact of education expansion on global inequality and the distributive impact of the Panama Canal enlargement. These dynamic macro-micro modeling approaches demonstrate the deep insights gained by building on Pyatt’s legacy.