An evaluation of the MORKMON Model

Summary MORKMON, De Nederlandsche Bank's new quarterly model of the Dutch economy fits in the last generation of macroeconometric models. Based on an integrated set of national and financial accounts, it combines demand, supply and financial conditions. Distinct features are a detailed financial sector, and endogenous exchange-rate determination. The specification reflects the model-builders inclination to give a great weight to empirical evidence. The model's forecasting performance is quite satisfactory, but not all simulations yield plausible results. In particular the interaction between the real and the financial sector could benefit from further research, for which MORKMON provides an excellent bridgehead.