Article [ Working Paper 07-06 - 06/10/2006]

FPB Tools and Methods

The main task of the FPB is to produce analyses and projections in the economic, social and environmental fields that are relevant for policy making. For that purpose, the FPB has, over the course of the years, developed a number of tools and methods. These instruments take shapes of different natures: formal models articulating economic behaviour, statistical tools, bookkeeping type instruments, less formal systemic frameworks, etc. Empirical validation has always been a subject of concern (hence the special attention paid to the building of databases) and can be considered as a common feature of this heterogeneous set of instruments.

The FPB has a long tradition of building models and using them for policy analyses. The FPB’s instruments have evolved significantly over time. This paper does not review the almost four decennia of experience with different tools and methods at the FPB, but gives only a brief overview of the most important instruments currently operational or under construction at the FPB. It should thus be considered as a snapshot of a constantly evolving subject.

Over the course of the years, the FPB’s tools and methods have undergone a process of deepening and widening: existing instruments have been upgraded and new models have been developed in additional research areas. Imperfections of instruments that mostly come to light when using them in applications give rise to enhanced versions. New theoretical insights and advanced empirical techniques (once they seem to be well established) are taken on board. The development of new tools usually reflects new features in society, emerging policy issues or new legal missions.

At least equally important to the development of tools and methods is the proper use of them to produce analyses and projections. The FPB’s experience as a ‘model user’ teaches first of all that instruments should be used for the purposes they are conceived for (“different models for different purposes”). To answer the question of whether a tool is suited for a given type of analysis, one should look beyond technical possibilities, and assess whether the underlying mechanisms of the tool are adequate for the issue under investigation. The FPB researchers are aware of the limitations of tools, essentially stemming from the fact that they unavoidably imply a stylisation of an increasingly complex reality. There is no single overriding model for the Belgian economy, which covers all aspects of policy-relevant issues. For that reason, the FPB often combines different tools when making analyses or projections. Models and tools start from different points of view, and have different strengths and weaknesses. In the end, the FPB summarises the outcomes of different instruments to contribute to the process of policy making.

Despite these caveats listed above, the use of more or less formalised instruments has the undeniable advantage that it increases the degree of rigour in analyses. Furthermore, reporting the characteristics of the instruments used contributes to the methodological transparency, a principle that the FPB considers of paramount importance.