MESS, a macroprudential modeling framework designed by OGR partners Jaromír Beneš, Tomáš Motl, and David Vávra


March 20, 2023

A recent working paper by OGR partners Jaromír Beneš, Tomáš Motl, and David Vávra introduces the MESS (MacroEconomic Stress Scenario builder), a macroprudential modeling framework.

The MESS is designed for practical application at policymaking institutions, synthesizing key insights from academic literature on financial cycles, interactions between the real economy and the financial system, and macroprudential policy. It features an explicit description of gross quantities on the financial sector's balance sheet and explicit concepts of demand and supply on the credit market, while its key equations linking the real economy and the financial sector are nonlinear, enabling policymakers to realistically examine the costs and benefits of macroprudential policy. The model is theoretically consistent, yet flexible and malleable enough to fit particular features of the economy and financial sector, making it an ideal tool for financial stability authorities in several countries. The paper presents the model itself, the principles on which it is built, and its use cases in policymaking institutions.

Beneš, J., Motl, T., & Vávra, D. (2023). Practical Macrofinancial Stability Analysis: A Prototype Semistructural Model (Working Paper Series No. 746). CERGE-EI, Prague.

You can reach the paper here: