A committee of unbiased specialists confirms the “high quality” of the financial projections of the Bank of Spain | EUROtoday

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This Wednesday, the Bank of Spain launched a be aware from the Governing Council on the exterior analysis carried out by three unbiased specialists of its macroeconomic projections. Specifically, the analysis committee of stated projections has been made up of Gian Maria Milesi-Ferretti, senior fellow del Hutchins Center on Fiscal and Monetary Policy de la Brookings Institution; Luca Onorante, head of the Nowcasting group on the Joint Research Center of the European Commission; and Nikiforos Vidalisadvisor to the governor of the Bank of Greece.

The establishment remembers that its projections of the Spanish economic system “are the subject of high attention from social agents, economic analysts, the media and the general public”, so “an adequate formulation of the projections and a correct communication of They are crucial to properly guide economic policies and have a positive impact on the reputation and credibility of the Bank of Spain.

The independent evaluators who have analyzed the processes and methodologies used by the Bank of Spain to prepare its projections, highlight in their report the “prime quality” of the projectionsthe clarity of its narrative and its ability to adapt to changing circumstances.

Likewise, they also highlight the influence that the Bank of Spain has on society through its projections and the usefulness of these in the adoption of economic policy decisions, Europa Press reports.

Recommended improvements

However, the independent experts' report identifies potential areas of improvement related to the models used, governance and the procedure followed for preparing the projections and their communication.

Among them, the experts recommend incorporating into the “Bank of Spain Quarterly Model” (MTBE), whenever possible, the tools outside of it currently used to inform expert judgment, as well as alternative schemes for forming agents' expectations. economical

Likewise, they point out the convenience of preparing and publishing regularly long-term projections of the Spanish economyas well as an assessment of the cyclical position of the economy.

On the other hand, they suggest studying the design of a non-quantitative risk assessment procedure, as well as the systematic generation of alternative scenarios and sensitivity analysis.

Regarding the study of specific issues relevant to the preparation of projections, they recommend forming groups to this interdepartmental for study. In addition, the report identifies some recommendations to improve the projections communication strategy.

Potential growth

Likewise, the body governed by Pablo Hernández de Cos will publish annually or every two years an analysis of the potential growth capacity of the economy in the medium and long term as part of the action plan that the institution has adopted to respond to the recommendations of the experts who have externally evaluated the projections on the Spanish economy made by the entity.

Likewise, the Bank of Spain, also as part of this action plan, will regularly include in the different projection exercises an assessment of the cyclical position of the economy.