The Independent Authority for Fiscal Responsibility (AIReF) today presented the MEGAIReF model, a Dynamic Stochastic General Equilibrium (DSGE) model developed in collaboration with Pompeu Fabra University, to representatives of institutions, study departments, universities and research centres. This proprietary tool will enable the institution to simulate and assess the impact of shocks and structural measures on key variables, such as growth, employment, inflation, the deficit and public debt, thereby strengthening the institution’s technical capacity and analytical independence.
The seminar, held at AIReF’s headquarters, was opened by its President, Cristina Herrero, who pointed out that the development of MEGAIReF reflects the institution’s commitment to continuously improving its technical capabilities. She explained that this new model reduces AIReF’s dependence on external tools and allows simulations to be adapted to the specific characteristics and challenges of the Spanish economy, as well as to the institution’s tasks.
The President stressed the importance of access to instruments that help anticipate the effects of different shocks and public policies in an environment of high uncertainty. Specifically, she pointed out that the model will make it possible to simulate and analyse the impact of medium-term shocks on key variables and improve AIReF’s ability to assess the impact of fiscal and structural measures such as the Recovery, Transformation and Resilience Plan (RTRP) and reforms associated with the sustainability of the pension system. In addition, the model will be relevant for analysing fiscal risks.
Cristina Herrero also stressed the importance of collaboration with the academic world and the learning derived from this joint project. In her opinion, MEGAIReF not only represents a significant step forward for AIReF, but also an example of fruitful cooperation between the General Government and university research.
The seminar was attended by Professors Davide Debortoli and Valeria Gargiulo from Pompeu Fabra University, who presented the development and estimation process and the model’s main results. Subsequently, AIReF’s Economic Analysis Division presented a practical application of the model for economic policy analysis. Finally, the event included a technical discussion led by Professors José Emilio Boscá and Javier Ferri from the University of Valencia, followed by an open debate with the attendees, which allowed for an exchange of experiences and points of view on macroeconomic modelling in the field of Spanish public institutions.
AIReF has long had tools covering the very short term, with models such as MIPred, which estimates GDP growth in real time; the medium term, with the quarterly MTA model; and the very long term, with population and growth models. However, until now, it did not have its own DSGE model, which is widely used in all economic institutions at international and national levels, and used the European Commission’s model when necessary. By developing MEGAIReF, AIReF expands and complements its set of macro fiscal models, reinforcing its role as an independent institution with technical capacity and credibility.
