The Foundation collaborates with the Ministries of Finance and Public Administrations and Economy and Competitiveness, BBVA, the University of Valencia and the Fundación de Economía Analítica, in the development of the project. Macroeconomic modelling and public policybased on the development of a rational expectations model (Rational Expectations Model for the Spanish economy, REMS) capable of analysing, designing and evaluating public policies aimed at promoting macroeconomic stability, full employment, regional cohesion and Spain's convergence with neighbouring countries.
Since its development in 2008, the REMS model has been used intensively by the State Secretariat of Finance and Budgets, the State Secretariat of Economy, the Economic Office of the President of the Government and the BBVA Research Department to carry out numerous simulations of the macroeconomic impact of different economic policy measures. Now, the REMS model, renewed with its stochastic version, makes it possible to reinforce the common language of technicians and researchers when analysing and evaluating the impact of different public policies on the Spanish economy, not only at the national level, but also internationally, given its advantages in terms of agility and comparability.
This project includes useful tools for research and analysis of public policies and focuses on three issues: the updating and extension of the REMS macroeconomic simulation model developed in previous projects; the analysis of the determinants of economic growth and the evolution of productivity and employment in two samples of economies, Spanish regions and OECD countries; and the evaluation and design of regional cohesion policies.
The new lines of research are outlined in a work plan for the coming years which includes updating, extending and improving the REMSDB database so that simulation exercises can use the latest available statistical information, which will also be available to external users of the database.
Among other issues, the model will make it possible to study the economic impact of different economic or sectoral policy initiatives taken by the government, to analyse the effectiveness of fiscal policies, to investigate the effect of the evolution of public debt on consumption decisions in the presence of credit constraints, to define the most appropriate fiscal instrument to be used and the speed with which it should adjust to economic shocks in order to maximise the welfare of the population.