Scandinavian Working Papers in Economics

Working Papers,
National Institute of Economic Research

No 137: Appropriate Macroeconomic Model Support for the Ministry of Finance and the National Institute of Economic Research: A Pilot Study

Göran Hjelm (), Helena Bornevall (), Pia Fromlet (), Jonny Nilsson (), Pär Stockhammar () and Magnus Wiberg ()
Additional contact information
Göran Hjelm: National Institute of Economic Research, Postal: National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden
Helena Bornevall: National Institute of Economic Research, Postal: National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden
Pia Fromlet: National Institute of Economic Research, Postal: National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden
Jonny Nilsson: National Institute of Economic Research, Postal: National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden
Pär Stockhammar: National Institute of Economic Research, Postal: National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden
Magnus Wiberg: National Institute of Economic Research, Postal: National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden

Abstract: We analyse model choices of various international institutions and find that the majority of the studied central banks have chosen so-called DSGE-models. Ministry of finances have chosen to continue using so-called Semi-Structural Models (SSM) while international organisations such as the IMF and the OECD have “a suite of models” including both DSGE and SSM. Based on these international experiences and the specific institutional set up in Sweden we list a number of criteria and rank different modelling strategies. We propose that a DSGE-model for both forecast and policy analysis including a rich modelling of fiscal policy would be appropriate for the Ministry of finance and the National Institute of Economic Research in Sweden.

Keywords: Macroeconomic modelling; model criteria; forecast; policy analysis; semi-structural models; DSGE; BVAR; SVAR; VAR

JEL-codes: E00

62 pages, March 5, 2015

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