Improving the Reliability of Macroeconomic and Macrofiscal Forecasts

October 3 – 5, 2017ILjubljana, SloveniaIBudget Preparation and Execution, Central Banking

Improving the reliability of macroeconomic and macro-fiscal forecasts helps strengthen the planning, analysis, and assessment of policy making. It upholds the country’s standing in international markets and enhances its credibility vis-à-vis external partners. A good understanding of the economic outlook is critical for fiscal planning purposes by ministries of finance, and equally important to central banks in the conduct of monetary and financial policies. Official macroeconomic and macrofiscal forecasts in our constituency often suffer from inaccuracy and optimism bias.

Indeed, if fiscal projections are driven by over-optimistic growth forecasts, there is less incentive to undertake necessary consolidation and revenue mobilization, and consequently greater risk to fiscal outcomes and orderly budgetary execution. Similarly, reliable and well understood growth forecasts are essential if monetary policy is to be effectively calibrated to impact on aggregate demand.

How did participants benefit?

To complement regional training in modeling and forecasting techniques, much of which is designed to provide methodological and economic knowledge, this learning initiative aimed to strengthen the operational know-how and skills for using cutting-edge forecasting tools, and discuss the key challenges underlying forecast errors.

  • As good and reliable forecasts are an essential input in the policy decision-making process, the event aimed at improving this awareness, identifying priorities of what institutional aspects of forecasting process needs strengthening, and presenting tools to strengthen these arrangements.
  • The focus of the event was on an overview of a range of forecasting methodologies and their applicability to participating institutions, given capacities and quality of data, thus establishing prerequisites for sound macroeconomic and macro-fiscal forecasting as well as increasing institutional capacities.
  • The workshop served as a platform for exchange of practices and participants discussed existing approaches to forecasting and cooperation among ministries, central banks, statistical offices and international institutions; and the needs for technical assistance to forecasting and data improvement.

What did they learn?

During the event, we addressed a range of crucial aspects linked to the following key areas:

  1. Forecasting methodologies
  2. Key institutional issues with respect to production of official forecasts that are used for budget planning
  3. Data Requirements

Target Audience

The workshop has been designed for staff at i) ministries of finance or other government institutions producing macroeconomic forecasts for budgetary planning; ii) central banks forecasting departments iii) fiscal councils; iv) national statistical offices and statistical departments of central banks;  and v) non-government institutes, as well as research and academic institutions producing macroeconomic forecasts.

The workshop has been delivered in English, and highly interactive, providing practical and workable solutions elaborated through a mix of expert-based learning, hands-on operational experience, and systematic exchange of knowledge and regional experience; and mapping out the current state in represented countries, i.e. through a pre-event survey and in-class discussion.

Lead Experts

JANEZ ŠUŠTERŠIČ

Mr. Šušteršič was director of the Institute of Macroeconomic Analyses and Development (IMAD) from 2000 to 2007. In that capacity, he led on development of forecasting approach from a purely judgmental one to incorporating advanced economic modeling methods. The Institute under his leadership developed tools for assessing impact of policy measures and advanced economic analysis.

From 2014 to 2016, Mr. Šušteršič was a key expert on a technical assistance project in Kosovo, leading a team of experts that helped develop forecasting models and techniques used by their Ministry of Finance. From his experience, he has broad understanding of methodological, institutional and data quality issues involved in forecasting and practical solutions that may be used in imperfect environments.

He also has rich hands-on experience in formulating and implementing economic and fiscal policy. He was Minister of Finance in Slovenia in 2012, Vice-President of the EU's Economic Policy Committee, and Vice-President of the Slovenia's Government Reforms Committee.

Currently, Mr. Šušteršič is a partner and consultant at Re-forma, research and development, ltd., and Full Professor of Economic Policy at International School for Social and Business Studies in Celje, Slovenia

MAKSYM IVANYNA

Maksym Ivanyna is Senior Economist at the Joint Vienna Institute (JVI); see here, for further information.

ARJANA BREZIGAR MASTEN

Arjana Brezigar Masten is Director of the Analysis and Research Department at the Bank of Slovenia.

SUZANNE FLYNN

Ms. Flynn works for the IMF and has been based at the CEF since October 2016. She is technical advisor for public financial management in South East Europe. At the CEF, Ms. Flynn helps deliver learning programs related to her work. She joined the IMF five years ago after six years working in East Africa with PwC and in the Ugandan treasury. She started her career in the UK public service in 1987, starting in central government, and qualifying as a CIPFA accountant in local government in 1991. Before embarking on her career in Africa, she spent 3 years working for CIPFA in London. She has also worked in a number of Asian and Central Asian countries, and worked with several governments in South East Europe.

TANJA KOSI ANTOLIČ

Tanja Kosi Antolič works as a public finance analyst at the Institute of Macroeconomic Analysis and Development (IMAD) of the Republic of Slovenia. In 2012-2014, she was an assistant professor of economics at the Faculty of Management, University of Primorska, where she had previously worked as a young researcher and a teaching assistant. In 2009, she was a Marie Curie Fellow at the Center for Operations Research and Econometrics, Belgium. She holds a M.A. in Economics from the University of Ljubljana and a Ph.D. from the University of Primorska.

Her research interests include labor market and public finance analyses. She has published articles in national and international journals, and participated in several research projects and academic conferences.

BJÖRN DÖHRING

Björn Döhring is head of the unit "Economic situation, forecasts, business and consumer surveys" at the European Commission's Directorate-General for Economic and Financial Affairs. He joined the forecast team in 2011 and was appointed head of unit in 2013.

He has worked as economist in the Commission's DG ECFIN since 2001 on changing assignments involving both macro- and microeconomic issues. His responsibilities included monetary and exchange-rate analysis, G8 coordination and labour-market policy. Previously, he worked on monetary and financial market matters at Deutsche Bundesbank.

Björn studied economics in Tübingen (Germany) and Lyon (France).

BERNHARD BOEHM

Bernhard Boehm is Country Economist for Iceland, as well as Bosnia and Herzegovina at DG ECFIN's D.1 Unit at the European Commission.

MARIJANA BEDNAŠ

Marijana Bednaš is the Deputy Director of the Institute of Macroeconomic Analysis and Development (IMAD), Slovenia; see here, for further information.

DEON FLORIAN TANZER

Deon Florian Tanzer works for the IMF and has been based at the CEF since September 2016. He is a technical advisor for government finance statistics (GFS) in South East Europe. He advises compilers in various national institutions on how to develop GFS data and data reporting, both for the IMF and the EU in compliance with the fiscal reporting requirements (the so-called Maastricht deficit and debt and the Excessive Deficit Procedure). Deon has gained extensive experience in GFS at the IMF and Statistics Netherlands. His work is funded by the Swiss Government.

Partners

This learning initiative was supported by:

Bank of Slovenia Slovenia's Development Cooperation Join Vienna Institution
Ministry of Finance Slovenia UMAR IMAD International Monetary Fund