Case Study: How a macro model can change your life and let you get that promotion?
ECONOMIC MODELSIf you have more than 20 spreadsheets you are in deep trouble
DATA
Next week you can get that. Why? The data is spread accross multiple spreadsheets. Every policy advisor collects data in their own way, for their own purposes.
Does this sound like your department? This is not strange. It is typical that data is collected in many spreadsheets without a clear convention.
When you have a Macro Economic Framework, a macro economic model in a spreadsheet, this problem will be over. Your data is in one single database called ‘THE SOURCE DATABASE”. In here you have all relevant raw data about your country collected and monitored.
So next time the Minister asks for some time series the answer is: ok. I will send it right away.
Why having a macro economic framework will save you out of trouble.
CONSISTENCY FRAMEWORK
When you are presenting your macro economic calculations for your country in a spreadsheet you get many questions.
People focus on your spreadsheet formulas instead of on your presentation. And you get many questions. They start questioning your models and assumptions behind your calculations.
Have you ever been in a presentation where you had zillions of questions about your calculations?
The one way to cope with this is by creating a MACRO ECONOMIC CONSISTENCY FRAMEWORK. This framework contains all definitions of the main economic variables. You can easily show how a variable is calculated, what its components are and what the relations are.
People are thrilled by how structured your calculations are and they start trusting you as a policy advisor. This is another feature of a Macro Economic Model. It has to contain this MACRO ECONOMIC FRAMEWORK of all the relevant variables for the past.
Once you have this, you won’t get into trouble during your next presentation. People will focus on what you have to say instead of on your assumptions.
Why making your life difficult, while it could be easier?
FORCASTING
You have to do these forcasts every year for your country. And during this long process there are many deadlines.
Because these forcasts will be published in your Economic Outlook publication, they have to be consistent and reliable.
You have to use all the latest data into this process. Often you have to allign your forcasts with other organizations.
Your Macro Economic Model is a tool to help you monitor the economy and make the best forcasts for the main indicators of the economy. This tool will help you make this forcasting and alligning with other organizations easier because it contains your assumptions, the main data up to the forcasts and a baseline for the future years. It also helps you to include policy measures and investments in your economy during the current year.
With a macro economic model your life during this annual forcasting process will become easier.
What if you got a thousand questions?
POLICY SCENARIOS
What-if questions will eventually end up on your plate as a policy advisor. They all want a concise policy note next week Monday where you indicate what the impact is of a policy scenario.
Without a Macro Economic Model it is a nightmare. Because you cannot possibly calculate all the effects on indicators like the Gross Domestic Product, Unemployment, Employment, Inflation within a week. It takes long time.
With a Macro Economic Model of your Country these What-if questions are easy to answer.
Because that is one of the main features of a model: to calculate the impact of policy. As it is a dynamic interrelated system where one variable is linked to other variables it is easy to calculate What-if scenarios.
Your job is to break down the request into simple input for your spreadsheet macro model and run a scenario. If you are not sure about the assumptions you run many scenarios. And to interpret the results and write them down in a policy note.
A macro economic model will make you feel comfortable when listening to the radio next time, because it will help you anser most of the questions.
Why your spouse will also love a macro model?
POLICY NOTES
Does this sound familiar?
Creating a policy note often means: looking for the data, analyzing the data, creating graphs and looking at trends. Describing trends and sometimes even doing some calculations of What-if policy scenarios. Finally you put some policy recommendations and your draft is done.
It takes a long time. You can make many mistakes, because you are under pressure.
Your time is precious. Especially your family time with your kids and spouse.
There is where a Macro Economic Model comes in. With a macro model, you have all your data structured in a spreadsheet, so you don’t have to look for data.
For all the indicators in your model there are historical graphs. So you can start picking the variables and graphs of the indicators that you want in your policy note. Copy and paste. What you need to focus on is translating the request for this policy note into a Scenario for the macro model and run that scenario.
You then focus on analyzing the results, writing down the impact on several variables and discussing your policy measures.
This is a straight process. The more you do it the easier it gets. Out goes your draft policy note.
A macro economic model will help you to spend more free time with your family. And your spouse will be happy too.
Why skipping christmas every year is not a great option for your relationship
ECONOMIC OUTLOOK
Each year you have to produce a new Economic Outlook for your country.
This is a time consuming process, where you gather many data, update tables, make calculations and come up with your best figure.
You often have to present this figure to internal and external stakeholders and you bet you get a lot of questions. What are your assumptions? Have you taken into account the latest Fiscal policy measures and the public investments and private investments taking place next year?
I get you. You can’t plan any vacation from October – December because you need to produce an Economic Outlook.
By now you know that a Macro Economic Model will help you. Because you will have been monitoring the economy way before October-December.
Because you have all your data monitored and collected.
Because you know exactly what data to focus on and what data not to focus on.
Because you have all the graphs already.
Because you have all the tables of your Economic Outlook publication as separate spreadsheets in your Macro model.
Your job is to put the latest figures in and discuss the estimates for the next Economic Outlook with your stakeholders. To allign your estimates. To check your assumptions.
It won’t be easy and “just press a button and we have the draft Outlook done”. You still need to bring in your expertise every year.
But with a macro economic model it will be way more easier than without a macro model.
Maybe this year you can take off for Christmas without any work waiting for you.
Why you don’t need to call the consultant anymore to ask how things work.
UPDATING YOUR FRAMEWORK
Many times you invest time to build a system with the help of an external consultant but you don’t get the training to do it yourself.
Because the knowledge is with the consultant. Only they know what happens behind this button. Do not press this button. No matter what.
I beg to differ. A macro economic model is an open system. No special coding. You as the user should be able to change it, tweak it, play with it. That is why you need to master it.
Once a macro model has been built you are responsible to update it. Because by updating it you master it. Because by updating it you keep monitoring the developments in your economy.
You have to learn to update your database and each component of the macro economic model.
That is why I build them in a spreadsheet. Because you understand spreadsheets.
Next time, they ask who is the expert in this macro model, they won’t be looking for me. You will be the expert. Don’t worry: I will back you up.
So now you know why a macro economic model matters
Lets take your macro economic analysis to the Next Level
I want to master a macro economic Model
How to use a macro economic model in practice?
That might by now be in your mind.
You know the benefits of having a macro model but you do not know where to start. You do not know if a macro model can be created this year for your country.
6 Week Online Training How to Do macro economic analysis with a Macro eConomic Model
I have created an online training that helps you answer this question. It is a 6 week’s program where I teach you how to work with a macro economic model and where I discuss with you what data you need to collect and from which organizations you need to collect it to create a macro economic model for your country.
We use a macro economic model for a real country in the Caribbean and I teach you how this sytem works in practice.
Get in touch with me by filling in the form below and I will tell you more details about this program.
I want you to build a macro Economic model for me
I want a macro economic model for my country. How much does it cost and what will it take to build a macro economic model?
You are responsible for investment decisions in your Policy Department or you are convinced and want to talk further.
Lets talk How I can help you
I help teams of Policy departments to create a macro economic model for their country. I help them to update the macro economic model, do policy scenarios, write policy notes, create economic outlooks, collect data, build a database. This can be done partly online and also in your office.
Get in touch with me about your requirements by filling in the form below and I will get back to you.
Number of Macro Economic Models made
Number of policy notes writen
Number of people trained
Number of happy clients
WHAT PEOPLE HAVE SAID ABOUT WORKING WITH ME
“I can’t believe I became acting head of the department in just 3 years. You told me this would impact my life.”
Get In Touch
Macro Economic Analysis
P. O. Box 6085,
World Trade Center Curacao
WHATSAPP/MOBILE:+59996678932
EMAIL: RUNY [AT] CALMERA [DOT] NL