The BIS Multisector Model: A Multi-Country Environment for Macroeconomic Analysis
Daniel Rees, from the Bank of International Settlement (BIS), presented the BIS Multisector Model to show that the effects of oil supply shocks differ across countries and sectors through industry structure and oil-intensity activities where shape the magnitude of shock effects and monetary policy trade-offs.
This paper introduces the BIS Multisector Model (BIS-MS), a dynamic stochastic general equilibrium (DSGE) model for analyzing macroeconomic dynamics in a multi-sector production network. The model can be calibrated to match the input-output data of more than 80 economies, enabling a detailed exploration of sectoral interdependencies and cross-industry shock transmission. By incorporating nominal rigidities at the sectoral level, the model can also be used to evaluate alternative monetary policy strategies. The paper demonstrates the model’s capabilities by analyzing temporary and permanent energy price shocks under different monetary policy frameworks. In doing so, it illustrates the critical role of the country-specific production networks in shaping macroeconomic outcomes. The accompanying model toolbox equips policymakers and researchers with an easy-to-access platform for flexible scenario analysis.
