Their primary advantage over conventional cross-country comparison method is that they are very powerful at evaluating policy changes not only ex post, but also ex ante.
These models do not take into account behavioral responses of people such as decreased labor supply induced by a tax hike.
On the other hand, dynamic tax-benefit models aim at simulating the selected aspects of the economy over long periods of time.
They utilize data on probabilistic characteristics of the underlying population to account for individuals' aging, changes in marital status, new children, etc.
These models are used, for example, to study the long-run effects of a change in tax code related to the number of children in the family.
As Holly Sutherland, the director of EUROMOD and one of the most influential researchers in this area, points out, "any model would be as good as the data available to it".
Because static tax-benefit models are usually built under hypothesis that individuals report all their incomes, the results of the simulations may be inaccurate.