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Given new programs and policies in the Philippines, there is a need to formulate a macroeconometric model (MEM) to gain more insights on how the economy and its sectors are affected. This paper discusses the estimation of an annual MEM that will be used for policy analysis and forecasting with respect to the opportunities and challenges brought about by new developments. The formulation of an annual MEM is useful in assisting major macroeconomic stakeholders such as NEDA and the BSP in their conduct of policy simulations, macroeconomic surveillance, and economic analysis. Given this backdrop, PIDS and BSP have collaborated to estimate an annual MEM, which has four blocks, namely, the real sector, fiscal sector, trade sector, and monetary sector. Using an Autoregressive Distributed Lag model approach, these sectors are modeled separately although the linkages with each other are specified. These sectoral models are then put together and a test on the predictive accuracy of the forecast of the overall model is done. Some ways to further improve the annual MEM are provided.

This scoping paper aims to present a summary of the past and present macroeconometric models of the Philippine economy. This paper looks at the various approaches and methodology used in modelling the economy. The various approaches were compared and contrasted in order to find the best possible way to model the Philippine economy. The strengths and the criticism of each model is also highlighted. In particular, the Cowles Commission Approach, the LSE Approach, and the General Equilibrium method was discussed and evaluated. From the literature review, it appears that there is a need for a new model for the Philippines considering only one model is actively being used for policy simulations. The development of a new macroeconomic model is also consistent with the needs of the major macroeconomic policy making bodies of the State (NEDA, BSP, etc.) to conduct macroeconomic surveillance, analysis and policy simulations. [...]

This scoping paper presents the current landscape of the Philippine macroeconometric models by reviewing the inventory of earlier studies. It finds that a there is a need to devise a new model for the Philippines considering that only two models are actively being used in policy simulations.