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Treasury Economic Model

Volume 958: debated on Thursday 16 November 1978

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asked the Chancellor of the Exchequer why the access of hon. Members to the Treasury's economic model does not extend to the effect of changes in the money supply on the exchange rate.

Over the last few years the Treasury has spent considerable effort on modelling parts of the financial system—including both external and domestic financial flows. This embraces possible links between monetary factors and the exchange rate—a particularly difficult area. The work is still at the stage of advanced research and will be described in a Treasury working paper which is in preparation and will be published very shortly.

asked the Chancellor of the Exchequer what plans he has at present to encourage hon. Members to make greater use of the Treasury's economic model; and if he will publish in greater detail the assumptions on which the model is based.

I am encouraging hon. Members to make greater use of the Treasury's economic model by providing more information. The structure of the model and the theory and assumptions on which the model is based are set out in the latest edition of the technical manual published by the Treasury in June 1978.In addition, the Treasury has contributed to a series of Government economic service working papers this year which set out the methods of analysis and the supporting evidence. Subjects include the effect of exchange rate changes, consumers expenditure and imports of manufacturers. A working paper on the modelling of the financial sector of the economy will shortly be appearing.

asked the Chancellor of the Exchequer if he will publish the names of private consultancy firms used by the Treasury to provide alternative sources of forecasting to the Treasury's economic model.

The Treasury does not employ consultants to supply forecasts as such. Forecasts and forecasting methods are discussed from time to time with most of the organisations professionally concerned with macro-economic forecasting. In addition, the published work is studied with particular reference to the reasons for differences of view.