Introduction Text

The Netherlands has the longest tradition in using econometric models in policy analyses. The first macroeconomic model ever, build by Jan Tinbergen in 1936, referred to the Dutch economy and was developed to answer the question of whether the government should leave the Gold standard and devaluate the Dutch guilder. In the seventies and eighties, model building became popular in many institutes and universities. At DNB model building started in 1971 and never stopped since.

The last couple of years, the Research Department of DNB has developed several models to support policy-making, including an econometric time-series model of the Dutch economy, a DSGE model of the Dutch economy, and several smaller models. The adage DNB uses in its modelling activities is ‘different models for different purposes’. In that respect a distinction is made between economic forecasting on the one hand and policy analyses (including story telling) on the other. Models primarily used for forecasting are DELFI, DFROG, DNB Business Cycle indicator, Inflation model, and a leading indicator model for GDP growth based on asset prices. Two models were developed for policy analyses, a DSGE model and a Pension model.