Bank of Finland staff forecasts: an evaluation

Abstract

Monetary policy decisions are based on assessment of the current and future state of the economy. In order to obtain forecasts, central banks build models, which are simplified representations of the complex interactions among macroeconomic variables. The Bank of Finland regularly publishes its forecasts, using a large set of data regarding current economic developments. Analysis of this large set of data includes the use of formal macroeconomic models, which are also employed to make projections for the future course of the economy. These projections represent the most likely values for the main macroeconomic variables of the Finnish economy.