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The ECB-Multi Country Model. A semi-structural model for forecasting and policy analysis for the largest euro area countries

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Listed:
  • Angelini, Elena
  • Bokan, Nikola
  • Ciccarelli, Matteo
  • Lalik, Magdalena
  • Zimic, Srečko

Abstract

This paper introduces the European Central Bank’s Multi Country model (ECB-MC), a coherent macroeconomic framework designed to support economic forecasting and policy analysis within the Eurosystem. The ECB-MC captures the economic dynamics of the five major economies in the euro area – Germany, France, Italy, Spain, and the Netherlands – which account for more than 80 percent of the euro area total GDP. By incorporating detailed structural features and data-driven insights, the model provides the main reference for the ECB’s staff macroeconomic projections, acting as a disciplined tool for forecasting, enabling scenario, risk and sensitivity analyses, and giving a framework to understand the transmission channels of various economic shocks. The paper offers a detailed account of the structure, the estimation and the model properties, and provides a primer on the potential uses of the ECB-MC in the Eurosystem macroeconomic projections. JEL Classification: C3, C5, E5, E6

Suggested Citation

  • Angelini, Elena & Bokan, Nikola & Ciccarelli, Matteo & Lalik, Magdalena & Zimic, Srečko, 2025. "The ECB-Multi Country Model. A semi-structural model for forecasting and policy analysis for the largest euro area countries," Working Paper Series 3119, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20253119
    Note: 338657
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    References listed on IDEAS

    as
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    2. Morris Goldstein & Mohsin S. Khan, 2017. "Income and Price Effects in Foreign Trade," World Scientific Book Chapters, in: TRADE CURRENCIES AND FINANCE, chapter 1, pages 3-81, World Scientific Publishing Co. Pte. Ltd..
    3. Flint Brayton & Peter A. Tinsley, 1996. "A guide to FRB/US: a macroeconomic model of the United States," Finance and Economics Discussion Series 96-42, Board of Governors of the Federal Reserve System (U.S.).
    4. Hubrich, Kirstin & Karlsson, Tohmas, 2010. "Trade consistency in the context of the Eurosystem projection exercises – an overview," Occasional Paper Series 108, European Central Bank.
    5. Angelini, Elena & Bokan, Nikola & Christoffel, Kai & Ciccarelli, Matteo & Zimic, Srečko, 2019. "Introducing ECB-BASE: The blueprint of the new ECB semi-structural model for the euro area," Working Paper Series 2315, European Central Bank.
    6. Darracq Pariès, Matthieu & Notarpietro, Alessandro & Kilponen, Juha & Papadopoulou, Niki & Zimic, Srečko & Aldama, Pierre & Langenus, Geert & Alvarez, Luis Julian & Lemoine, Matthieu & Angelini, Elena, 2021. "Review of macroeconomic modelling in the Eurosystem: current practices and scope for improvement," Occasional Paper Series 267, European Central Bank.
    7. Adjemian, Stéphane & Bokan, Nikola & Darracq Pariès, Matthieu & Müller, Georg & Zimic, Srečko, 2024. "ECB-(RE)BASE: Heterogeneity in expectation formation and macroeconomic dynamics," Working Paper Series 2965, European Central Bank.
    8. Hubrich, Kirstin & Karlsson, Tohmas, 2010. "Trade consistency in the context of the Eurosystem projection exercises - an overview," Occasional Paper Series 108, European Central Bank.
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    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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