Gerhard Fenz and Martin Spitzer INTRODUCTION Until it joined the European System of Central Banks (ESCB), the Oesterreichische Nationalbank had no strong incentive to undertake the considerable task of building a macroeconomic model for forecasting purposes, as this task was performed by two domestic research institutes. From the late 1970s onwards, the Oesterreichische Nationalbank relied mainly on individual models for diﬀerent sectors and problems. In the late 1990s, an annual macromodel was expressly built to contribute a forecast of the Austrian economy within the ESCB projection exercise. As a next step, the development of the Austrian Quarterly Model (AQM) proceeded in close cooperation with the ECB over a period of two years, from 2002 to 2003. Of course the speciﬁcation of the AQM is not ﬁxed but constantly under review, so that it is extended and re-estimated in light of new data and new developments in modelling technology. 2 USES OF THE MODEL The purpose of the AQM is twofold. Firstly, it produces forecasts of the Austrian economy up to three years ahead for the ESCB projection exercise. The model-based estimates of future economic developments may undergo revisions to incorporate experts’ judgmental assessments. This is typically the case when faced with structural breaks or discretionary policy measures which cannot be captured econometrically. Forecasts are published twice a year, in June and December. Secondly, the AQM provides simulations of diﬀerent scenarios including policy measures or external shocks. These simulation exercises are carried out for international institutions such as...
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