8. 1 Model of the Banco de España Pablo Burriel, Ángel Estrada and Javier Vallés INTRODUCTION This chapter describes the main characteristics of the Spanish macroeconometric model of the Banco de España. The structure of this model is similar to the ones developed for other countries with the objective of constructing a multi-country model (MCM) for the euro area, although it has some speciﬁcities that are linked to the properties of the Spanish economy. The ﬁrst version was jointly developed by the staﬀ of the European Central Bank and the Banco de España (see Willman and Estrada, 2002). The latest version was fully developed by the Banco itself (see Estrada et al., 2004) and was estimated under the new ESA-95 data set. 2 USES OF THE MODEL The model is used at the Banco de España with two main goals: to obtain medium-term forecasts of the Spanish economy (two to three years) and to integrate the results provided by the other forecasting tools in a more general framework. The model can incorporate the forecasts from other models and, especially, the judgments of analysts through the use of ‘add factors’, which make the projections a combination of model-generated forecasts and judgmental information. These projections are done quarterly and, although they are not made public, they are used to elaborate the quarterly report of the Spanish economy, published in the Boletín Económico. They also represent the Banco de España’s contribution to the ESCB’s...
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