Norges Bank Structural Model

Register to read the introduction… This forecasting analysis makes use of a structural model (NEMO), but this model is primarily suited for medium term analysis of the effects of monetary policy on the macroeconomy. Norges Bank’s forecasts for the first few quarters are largely based on current statistics, information from Norges Bank’s regional network and forecasts obtained from a number of short-term statistical and econometric models. The published projections in the monetary policy reports are the result of an overall assessment based on both models and judgment. SAM – Short-term forecasting From the memorandum of Jore A. S, et al (2008) we can get a clear picture about that Norges Bank has the last few years developed and implemented forecasting methods of model combinations used in the monetary policy operations. These forecasts are unconditional forecasts. At the heart of the evaluation and combination of short-term forecasts is a set of programs collectively referred to as SAM – the System for Averaging Models. Forecast combination become popular in central banks as a mean to improve forecasts and to alleviate the risk of selecting poor …show more content…
Without this organization, probably policies would have not been enough to resolve the financial difficulties. The Fund is operating through the Norges Bank as an investment bank that enables Norway to generate high level of income independent from non-renawable sources. According to Jafarov, et al (2007), The Fund was established as a tool to support prudent management of Norway’s petroleum wealth. One purpose is to shield the non-oil economy from price fluctuations. The Fund is also a long-term savings instrument. It will help to cope with future financial commitments linked to an ageing population. Accumulation of capital in the Fund reflects the depletion of a non-renewable resource, which is exchanged for financial assets through the Fund’s investments. By setting up the Fund, it became possible to establish a path for production of oil and gas that is independent of the profile for petroleum revenue spending. Norges Bank manages the fund on behalf of the Ministry of Finance. In 1998, the Bank established a separate investment management unit, Norges Bank Investment Management (NBIM), which manages the fund. The alternative to a fund would have been to directly regulate production by putting a conservative upper limit on annual extraction.