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Review of macroeconomic modelling in the Eurosystem: current practices and scope for improvement

Matthieu Darracq Paries, Alessandro Notarpietro, Juha Kilponen, Niki Papadopoulou, Srečko Zimic, Pierre Aldama, Geert Langenus, Luis Alvarez, Matthieu Lemoine, Elena Angelini, Matija Lozej, Robert-Paul Berben, Fulvia Marotta, Alice Carroy, Julien Matheron, Kai Christoffel, Carlos Montes-Galdón, Matteo Ciccarelli, Joan Paredes, Agostino Consolo, Massimiliano Pisani, Pietro Cova (), Michaela Elfsbacka Schmöller, Milan Damjanović, Andra Smadu, Grégory de Walque, Béla Szörfi, Stéphane Dupraz, Harri Turunen, José Emilio Gumiel, Fabio Verona, Thomas Haertel, Igor Vetlov, Samuel Hurtado (), Anders Warne, Paulo Júlio, Anastasia Zhutova and Michael Kühl ()

No 267, Occasional Paper Series from European Central Bank

Abstract: This paper provides an assessment of the macroeconomic models regularly used for forecasting and policy analysis in the Eurosystem. These include semi-structural, structural and time-series models covering specific jurisdictions and the euro area within a closed economy, small open economy, multi-country or global setting. Models are used as analytical frameworks for building baseline projections and for supporting the preparation of monetary policy decisions. The paper delivers four main contributions. First, it provides a survey of the macroeconomic modelling portfolios currently used or under development within the Eurosystem. Second, it explores the analytical gaps in the Eurosystem models and investigates the scope for further enhancement of the main projection and policy models, and the creation of new models. Third, it reviews current practices in model-based analysis for monetary policy preparation and forecasting and provides recommendations and suggestions for improvement. Finally, it reviews existing cooperation modalities on model development and proposes alternative sourcing and organisational strategies to remedy any knowledge or analytical gaps identified. JEL Classification: C5, E47, E52, E58, F4

Keywords: central banking.; econometric modelling; forecasting and simulation; monetary policy (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-cba, nep-eec, nep-isf and nep-mac
Note: 604093
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