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Short- and long-term forecasting by the Netherlands Bureau for Economic Policy Analysis (CPB): Science, witchcraft, or practical tool for policy?

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  • Frits Bos
  • Coen Teulings

Abstract

CPB forecasts for the next year and for the next period of government should be seen as well-motivated estimates based on all recent information, plausible assumptions and expected trends. These assumptions and trends are partly based on econometric estimation methods and insights from economic theory. However, the economy is a chaotic system in which small events can have major effects at short notice. Even when major uncertainties and risks are well understood, it remains impossible to indicate where and when a little spark will kindle a great fire or when the bubble in (e.g.) the housing or stock market will burst. The more distant the look into the future, the more uncertain are the forecasts. For such long-term analyses, the CPB employs scenarios, extended sensitivity analyses and identification of major political choices. Policy making is like sailing in fog. The regular set of CPB forecasts helps to look forward and to monitor whether a change of course is necessary. Despite fundamental uncertainty about the future, the CPB forecasts provide a good base for political discussions and decision making, like a coalition agreement, budget and wage rate negotiations and defining a long-term policy strategy. These forecasts inform Dutch society, reduce transaction costs in economic and political decision making, and foster consensus on economic and fiscal policy.

Suggested Citation

  • Frits Bos & Coen Teulings, 2013. "Short- and long-term forecasting by the Netherlands Bureau for Economic Policy Analysis (CPB): Science, witchcraft, or practical tool for policy?," OECD Journal on Budgeting, OECD Publishing, vol. 13(1), pages 45-56.
  • Handle: RePEc:oec:govkaa:5k409g58z133
    DOI: 10.1787/budget-13-5k409g58z133
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    References listed on IDEAS

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    1. Rocus van Opstal, 2006. "Charting choices 2008-2011: economic effects of eight election platforms," CPB Document 139, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    3. Colander,David C. & Coats,Alfred William (ed.), 1989. "The Spread of Economic Ideas," Cambridge Books, Cambridge University Press, number 9780521362337, Enero-Abr.
    4. Frits Bos, 2008. "The Dutch fiscal framework: History, current practice and the role of the central planning bureau," OECD Journal on Budgeting, OECD Publishing, vol. 8(1), pages 1-42.
    5. repec:rnp:ecopol:09111 is not listed on IDEAS
    6. Raghuram G. Rajan, 2005. "Has financial development made the world riskier?," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 313-369.
    7. Raghuram G. Rajan, 2010. "Fault Lines: How Hidden Fractures Still Threaten the World Economy," Economics Books, Princeton University Press, edition 1, number 9111.
    8. Coen Teulings & Frits Bos, 2010. "CPB and Dutch fiscal policy in view of the financial crisis and ageing," CPB Document 218, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Bas ter Weel & Albert van der Horst & George Gelauff, 2010. "Strengthen cities to prepare the Netherlands for the future," CPB Special Publication 88, CPB Netherlands Bureau for Economic Policy Analysis.
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    Cited by:

    1. Bos, Frits & Zwaneveld, Peter, 2017. "Cost-benefit analysis for flood risk management and water governance in the Netherlands; an overview of one century," MPRA Paper 80933, University Library of Munich, Germany.
    2. Klink, Ab & Schakel, H. Christiaan & Visser, Sander & Jeurissen, Patrick, 2017. "The arduous quest for translating health care productivity gains into cost savings. Lessons from their evolution at economic scoring agencies in the Netherlands and the US," Health Policy, Elsevier, vol. 121(1), pages 1-8.
    3. Frits Bos & Thomas van der Pol & Gerbert Romijn, 2018. "Should CBA’s include a correction for the marginal excess burden of taxation?," CPB Discussion Paper 370, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Frits Bos & Thomas van der Pol & Gerbert Romijn, 2018. "Should CBA’s include a correction for the marginal excess burden of taxation?," CPB Discussion Paper 370.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

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    More about this item

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • C0 - Mathematical and Quantitative Methods - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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