From the course: Excel: Economic Analysis and Data Analytics
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Scenario analysis in economics - Microsoft Excel Tutorial
From the course: Excel: Economic Analysis and Data Analytics
Scenario analysis in economics
- [Instructor] I'm in the 04_03_Begin file from the exercise files folder. Ed is concerned about tax reform in Washington. His boss has asked him to analyze three possible scenarios that might occur if tax reform moves forward. And in particular, Ed's firm is trying to understand the impact this might have on REIT flows from investors. So in the first scenario, Ed expects that the top marginal tax rate would fall from 39.6% to 35%. This reduced tax rate should boost GDP growth from their current forecast of 1.8% to a new level of 2%. In order to offset this tax reduction, the long term capital gains rate would be raised to 20%. In scenario two, Ed is forecasting that the top marginal tax rate might fall all the way to 30%. This in turn would lead to GDP growth of 2.3%. But again, long term capital gains rates would have to rise. And in this case, they would increase to 25%. Finally in scenario three, the top marginal tax rate…
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