June 2, 2010

Calibration of GAMMA 2010

The GAMMA model is used to assess the sustainability of Dutch public finances. For this purpose the model is calibrated on a macroeconomic dataset. This dataset is extended with government and pension sector data. Business cycle data are used to make equilibrium corrections.

This memorandum reports on this calibration exercise.

Section 2 starts with a description of the data used in GAMMA. The macro data for 2008 are based on the national accounts of Statistics Netherlands. For GAMMA the government expenditures categorical classification is transformed into a functional classification; the simplifying assumptions made are explained. The end of section 2 presents business cycle corrections.

Section 3 describes how we use the population projection of Statistics Netherlands.

Section 4 presents the calibration procedure for the government sector, firms, households and the pension sector, respectively.

Section 5 reports how we take into account the most recent mid term projection of CPB.

The appendices present technical details.

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