Macroeconomic models for monetary policy: State of play and way forward

Economic models play a central role in modern central banks’ assessment of the state of the economy (nowcasting), the forecasting of macroeconomic developments and inflation over the relevant policy horizon (2-3 years), the calibration of the adequate monetary policy stance and instruments, the appraisal of costs, benefits and risks of alternative policy routes (e.g. scenario analysis), as well as the identification of long-term secular economic trends. This workshop offers an overview of central banks’ macroeconomic modelling toolbox in the context of central banks’ monetary policy strategy reviews and with a view to coping with the challenges from climate change, a falling r*, proximity to the effective lower bound on interest rates, and the COVID crisis. The workshop will translate the technical modelling work into a policy-oriented format accessible to economic policy makers, financial practitioners and economists active outside the narrow field of economic modelling and forecasting. The workshop brings together major global institutions active in the field. The aim is to provide orientation over the multitude of evolving workstreams and approaches, to encourage benchmarking and cross-fertilization between institutions, to link interested researchers, and to open avenues for future cooperation.

ECB Strategy Review
Occasional Paper Series: Review of macroeconomic modelling in the Eurosystem: current practices and scope for improvement (pdf)

Scientific coordination
Matthieu Darracq Paries, ECB; Ernest Gnan, OeNB and SUERF; Juha Kilponen, Bank of Finland, and Alessandro Notarpietro, Banca d’Italia.