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The evolution of the Forecasting and Policy System (FPS) at the Reserve Bank of New Zealand

Felix Delbruck, Ashley Dunstan, David Hargreaves, Hamish Pepper, Catherine Sleeman

The Forecasting and Policy System model (FPS) has been a very useful tool for forecasting and communication at the Reserve Bank of New Zealand. In part, its success has been due to pragmatic use, and the evolution of the model to reflect changing views of the New Zealand economy. However, as economic theory and modelling technology have developed, it is likely that the next core model for producing projections at the Reserve Bank will be a DSGE model. This note looks forward to that possibility with two aims in mind. First, the paper discusses how FPS has been used at the Reserve Bank over the last 11 years. Second, we describe how the structure of FPS has changed over time.