counter - example to explain why the executive board considers that the main scenario is the one that at present gives the most well - balanced monetary policy. it can also illustrate different risks that an individual member wishes to illustrate or perhaps even a scenario that one person prefers instead of the main scenario. our experience is that the work on the different scenarios makes it easier for us executive board members to agree on a main scenario that the majority of us can support. the results are then presented at something called the first large monetary policy group meeting. this meeting is held in roughly the third week of the eight - week long forecasting process. of course, we also have the capacity to produce new alternative scenarios later on in the process if this is necessary. several different meetings lead up to the main scenario prior to the first large monetary policy group meeting a number of meetings are held within the monetary policy department. the executive board members are invited to intend these meetings, but they are mainly intended to be working meetings for the economists. the discussions are often at a relatively detailed and technical level. it is at these meetings that the forecasts in the main scenario begin to take shape. the main scenario is the development we consider to be the most probable and which is described in chapter 1 of the monetary policy report. important new statistics and new events in sweden and abroad are presented and analysed at these meetings. there are also comparisons with how developments relate to the earlier assessments. the purpose is to gain an impression of the current status of the economy. for a small, open economy like sweden the natural starting - point for the forecasting work is how economic activity and inflation develop in the world around us. the forecasting work therefore begins with an international outlook meeting, which has the purpose of reaching a preliminary forecast for international events. soon after this a financial market meeting is held. at this meeting there is a discussion of market participants ’ expectations of the repo rate and how these have changed since the previous monetary policy meeting. these are then compared with the model forecasts for the repo rate and how these have changed. in addition, there are analyses and discussions of what has happened in the financial markets since the previous assessment. house prices, credits, stock market rates, exchange rates, money supply, international rates and so on are also discussed at this meeting. after this a current status meeting is held, where the focus is on the current situation in the swedish economy. one particularly important aspect is to assess how much of

macro data. 9 in in academic research these models are usually called models of reduced form. for a review of the results from the models and their forecasting performance see adolfson et al ( 2007a ). dsge stands for dynamic stochastic general equilibrium models. ramses stands for the riksbank ’ s aggregated macro model for studies of the economy in sweden. for a more detailed description see adolfson et al ( 2007b ). var stands for vector autoregressive model. a bayesian var model some form of subjective information prior to estimation is used, for instance how high the long - term sustainable growth rate is. in general, the further ahead we look, the more importance we give to economic theory and the assumptions of long - term equilibrium in ramses and the bayesian var models. to gain an impression of the current situation in the swedish economy we instead use different time series models and indicator models. these are used to make forecasts 1 - 2 quarters ahead. the forecasts are then used as starting values in the large macro models. of course there are also substantial elements of assessments of what comprises a probable development for the economy throughout the entire process. material for our assessments and forecasts comes from many sources on the whole, we use official statistics and the results of surveys from authorities such as statistics sweden and the national institute of economic research and their counterparts in other countries. we also closely follow the assessments made by other forecasters in sweden and abroad and regularly evaluate our own forecasting performance. we also bring back new impressions from the many international meetings we regularly attend. in addition, the riksbank has begun to carry out its own company surveys. this involves our employees visiting companies around the country and hearing their views on the economic situation. this is a means of obtaining explanations of what we can see in the official statistics and of capturing tendencies before they appear in the statistics. the process begins with a discussion of the risks before i go in greater detail into how we make forecasts, i would like to make some general observations. firstly, making forecasts is a continuous process. many of us at the riksbank, both executive board members and employees in the different departments, closely monitor economic activity. the increased use of models makes it easier to some extent to update the forecasts when new information is received. but we only make a new, thorough and coherent assessment of what all the new information means for future monetary policy in connection with our monetary