Models for monetary policy analysis and forecasting
A number of analytical tools are used in forecasting and monetary policy analysis.
The forecasting and monetary policy analysis system
- Norges Bank’s Monetary Policy Handbook (Norges Bank Papers 1/2022), Chapter 3.2.
- On the purpose of models - The Norges Bank experience (Staff Memo 6/2011)
- Monetary policy analysis in practice – a conditional forecasting approach, (Staff Memo 8/2010)
Models for monetary policy analysis (NEMO)
NEMO (”Norwegian Economy MOdel”) was developed by Norges Bank and is a macro model for forecasting and monetary policy analysis. The model is based on international research and model development over the past 20 years and has many features in common with similar models in other central banks.
Models for short-term forecasting (SAM)
Norges Bank’s short-term forecasts are based on a number of statistical and econometric models and judgment. A broad information set about the economic situation is part of the analysis. No single model can provide a complete description of reality. Different models have different properties. Theory and experience show that a weighted average of different model-based forecasts is often more accurate than forecasts provided by individual models. Norges Bank has therefore developed a system, SAM (System for Averaging Models), for averaging forecasts for inflation and mainland GDP provided by different models.
Other models for forecasting and analysis
A number of smaller models are also used to a varying extent for forecasting and analysis. These models are partly used as cross-checks of forecasts provided by other models and partly for analysing specific conditions.
- The Phillips curve and beyond - Why has wage growth been so low? (Norges Bank Staff Memo 10/2018)
- Estimates of the neutral rate of interest in Norway (Staff Memo 7/2018)
- What influences household demand for goods and services? (Staff Memo 4/2016)
- The long-run exchange rate for NOK: a BEER approach (Norges Bank Working Paper 19/2010)
- Simple cross-check models for the krone exchange rate, (Staff Memo 1/2008)