evaluation report on the activities of the economics and

Evaluation report on the activities of the Economics and Research

Department of Banco de Portugal2014

Vítor Gaspar

Fátima Barros

Ricardo Reis

João Santos

Evaluation report on the activities of the Economics and Research Department of Banco de Portugal

Lisbon, 2014

Design Banco de Portugal | Administrative Services Department | Editing and Publishing Unit

ISSN (online) 2183-377X

Contents

Disclaimer | 7

Acknowledgements | 9

Executive summary: Conclusions and main recommendations | 11

Introduction | 16

PART 1. Activities

1. Participation in the Eurosystem | 18

Box 1: Decision-making in the Eurosystem | 18

Box 2: Preparation of macroeconomic projections | 20

2. Policy advice to the Governor of Banco de Portugal | 20

3. Research | 21

3.1. Publications in academic journals | 22

Box 3: ECB points system for publications | 22

3.2. Working Papers | 24

4. Regular publications and communication | 25

4.1. Regular publications | 254.1.1. Regular publications produced by DEE | 25

4.1.2. Release and impact of DEE’s publications in the media | 26

4.2. DEE’s other institutional publications | 28

Box 4: Book A Economia Portuguesa no Contexto da Integração Económica, Financeira e Monetária (The Portuguese Economy in the Context of Economic, Financial and Monetary Integration) | 30

4.3. Seminars, courses, conferences and workshops | 31

4.4. DEE’s internal communication | 32

5. Institutional cooperation | 32

5.1. Other departments of Banco de Portugal | 32

5.2. Domestic institutions | 33

5.3. International institutions | 34

PART 2. Special topics

6. The Portuguese economy | 35

6.1. Economic indicators | 35

6.2. Forecasting | 36

6.3. Structural studies | 37

7. Create a new Financial Intermediation Division in the DEE | 38

7.1. DEE’s past Financial Intermediation related activities | 39

7.2. The case for a Financial Intermediation Division within the DEE | 40

7.3. Proposed Financial Intermediation Division’s responsibilities | 41

PART 3. Organisation and Human Resources

8. Organisation | 43

9. Demography | 44

10. Recruitment process | 44

11. Careers | 46

12. Training | 49

13. Mobility | 50

PART 4. Recommendations and suggestions

Main recommendation 1: Set up an accountability framework | 51

Main recommendation 2: Improve human resource management | 51

Main recommendation 3: Identify financial intermediation and European financial integration as priorities for the next three years and create a financial intermediation division | 53

Main recommendation 4: Pursue excellence in research | 54

Main recommendation 5: Rethink communication | 54

6. Other relevant recommendations | 55

Charts and Tables

Table 1.1 International institutional representation of Banco de Portugal in 2013 | 56

Table 1.2 International institutional representation of the DEE in 2013 | 56

Chart 3.1 Developments in the total number of articles published in peer-review journals and in articles weighted by ECB ranking | 57

Chart 3.2 JEL CODES of the articles published in peer-review journals (number of articles) | 57

Chart 3.3 Concentration of the number of articles (by economist) | 58

Chart 3.4 Working Papers published in the Banco de Portugal series | 58

Table 3.1 List of publications according to the Point System for Publication of the ECB | 59

Chart 4.1 Evolution of the total number of news items relating to the DEE and a breakdown by publication | 60

5Evaluation report on the activities of the Economics and Research Department of Banco de Portugal

Chart 4.2 Evolution of the total number of news items relating to the Quarterly Economic Bulletin and a breakdown by media type | 60

Chart 4.3 Breakdown of the total news items relating to the DEE’s publications (for 2013) | 61

Chart 4.4 Number of pageviews of the Quarterly Economic Bulletin through Banco de Portugal’s institutional website (from 2012; data per publication) | 61

Chart 4.5 Frequency of consultation of the DEE’s regular publications | 62

Chart 4.6 Breakdown of OTSs per DEE publication | 62

Chart 4.7 Evolution of the total number of news items relating to the Annual Report and a breakdown by media type | 63

Chart 4.8 Evolution of the total number of news items relating to the Monthly Economic Indicators and a breakdown by media type | 63

Chart 4.9 Number of pageviews of the Monthly Economic Indicators through Banco de Portugal’s institutional website (from 2012; data per publication) | 64

Chart 4.10 Number of pageviews of the Coincident Indicator through Banco de Portugal’s institutional website (from 2012; data per calendar month) | 64

Chart 4.11 Evolution of the total number of news items relating to the Financial Stability Report and a breakdown by media type | 65

Chart 4.12 Number of pageviews of the Financial Stability Report through Banco de Portugal’s institutional website (from 2012; data per publication) | 65

Chart 4.13 Evolution of the total number of news items relating to the DEE and a breakdown by media type | 66

Chart 4.14 Each media type’s share of news items relating to the DEE (for 2013) | 66

Chart 4.15 Shares of each support type used to consult the DEE’s publications | 67

Chart 4.16 Number of pageviews of the Book A Economia Portuguesa no Contexto da Integração Económica, Financeira e Monetária (The Portuguese Economy in the Context of Economic, Financial and Monetary Integration) through Banco de Portugal’s institutional website (from 2012; data per calendar month) | 67

Chart 4.17 Seminars and courses organised by the DEE | 68

Table 9.1 DEE staff (as of 31 December 2013 of each year) | 68

Table 12.1 Examples of specific internal initiatives focusing on technical issues | 69

Table 12.2 DEE’s external training (2011-2013) | 69

Table 13.1 Internal mobility – DEE (2011-2013) | 70

Table 13.2 External mobility – DEE (2011-2013) | 70

Annexes

Annex I. Independent Commission’s Mandate for assessing DEE’s activities | 71

Annex II. Acronyms and abbreviations | 72

Annex III. Sources of information used | 72


DisclaimerThe report is signed by Professor Vítor Gaspar (Chairman), Banco de Portugal, Professor Fátima Barros, ANACOM – Autoridade Nacional de Comunicações, Professor Ricardo Reis, Columbia Uni-versity and Professor João Santos, Federal Reserve Bank of New York. This is the composition of the independent evaluation commission appointed by Banco de Portugal to assess the activities of the Economics and Research Department (from here on “DEE” or “Department”).

The views expressed are those of the authors and do not necessarily reflect those of Banco de Portugal, Eurosystem, ANACOM – Autoridade Nacional de Comunicações, the Federal Reserve Bank of New York or the Federal Reserve System.


AcknowledgementsThe members of the Evaluation Commission want to thank the Management team of the Eco-nomics and Research Department for their outstanding cooperation during the process and, in particular, for all the information made available and their willingness to have extended exchang-es of views with the Evaluation Commission.

We would also like to thank Jorge Correia da Cunha (advisor to the Management team of the Economics and Research Department) and DEE’s division heads for all their collaboration. The members of the Evaluation Commission also thank all the staff of DEE for their availability to have interviews with the Commission and sharing their views on the functioning of the Department.

We also want to thank all of those in Banco de Portugal who read the report and made insightful comments and suggestions and to those who were available to have interviews with the Commis-sion and answer to the questionnaires that were sent.

The Commission also thanks all the support work provided by Hélia Mendes (Secretariat to the Commission).

We want to thank the current and former Governors and the other Members of Banco de Portu-gal Board of Directors for all their collaboration and for sharing their opinions about the Depart-ment.


Executive Summary: Conclusions and main recommendations Our overall assessment of the Economics and Research Department of Banco de Portugal in the period under review (2000-2013) is positive.

DEE provides analysis, information and policy advice to the Governor especially in his role as member of the ECB’s Governing Council. The Department actively participates in the work of the Eurosystem and the European System of Central Banks. DEE’s contributions are highly appreci-ated by relevant stakeholders. Contributions to the ECB’s monetary policy strategy, including the role of monetary aggregates and economic forecasts were particularly relevant.

DEE produces reference work. Its publications are considered by economists as important for their analysis of the Portuguese economy. The Quarterly Economic Bulletin and the Annual Report were, in the period under review, the flagship publications. Gradually the Quarterly Economic Bulletin, which includes economic forecasts for the Portuguese economy, has become the most important publication. It now enjoys significant prominence and is widely used by the press, the general public, professional economists and researchers. That is clear from media reporting, internet access, and opinions surveyed. In general the visibility of work on the Portuguese econ-omy seems to be increasing. This trend benefited from a substantial rise in the importance of electronic access and the use of Banco de Portugal’s publications.

A good example is provided by The Portuguese Economy in the Context of Economic, Financial and Monetary Integration released in 2009. This book brings together diversified contributions from all strands in the Department. It effectively uses synergies between research and policy work. It relies on research that was previously published in some of the best academic journals. In 2013 the book was still accessed more than 20,000 times on the institutional website of the Banco de Portugal.

DEE produces analytical work up to the standards of leading peer-reviewed academic journals. Between 2000 and 2013, DEE’s economists have published 172 papers in academic journals. 19 of these made it to top-ranked journals. Over time there is a clear upward trend. DEE is ranked among the top economic research institutions in Portugal. It has established a reputation for excellence in research inside the Eurosystem. The main fields of publication are unsurprisingly monetary economics and macroeconomics. A strong strand in the Department makes use of large micro datasets to investigate topics such as financial intermediation, labour markets, prod-uct markets, and international trade. This places DEE at the cutting edge of on-going research.

Over the years DEE has made relevant contributions in the area of financial intermediation and financial stability. The regular publication of the Financial Stability Report since 2005 is particularly noteworthy1. The Department has also successfully participated in the Eurosystem’s Household Finance and Consumption Network.

In the 2004 Evaluation Report of Research Activities at the ECB, the evaluators wrote: “Academi-cally oriented economists provide additional benefits to a central bank ( ) such economists can model economic circumstances not ordinarily, if ever, encountered in reality, such as financial instability or deflation, and develop strategies for dealing with them”. The ability to adapt to unforeseen circumstances has been illustrated, in the context of the financial crises, by the pro-

1. In2013,theBancodePortugaldecidedtocreatetheFinancialStabilityDepartmenttohelptheBankpromoteandsafeguardfinancialsystemstability.ThenewdepartmentwasentrustedwiththeresponsibilityofcoordinatingtheBank’sfinancialstabilityrelatedactivitiesandpolicies.

Evaluation report on the activities of the Economics and Research Department of Banco de Portugal12

duction of the Funding and Capital Plans and the Stress Tests.

DEE has been able to attract and maintain outstanding staff. In the last 10 years staff has aver-aged 77. In 2013 it declined to 73 as some of its staff moved to the newly established Financial Stability Department. The share of PhD economists has increased, from 1/5 in 2000 to 1/3 in 2013. The Department has a strong deontology based on sound analysis and research. That allows staff to work with remarkable cohesion even under stressful conditions.

Our overall assessment of DEE is positive. Nonetheless, the Economics and Research Depart-ment Evaluation Commission (from here on “Commission”) is of the view that there is potential for improvement. Given the quantity and quality of resources available, DEE can move closer to the efficiency frontier. In order to do so it should address gaps in some areas. Firstly, management practice could improve by following a top-down approach to strategic planning and priority-set-ting. Systematic evaluation of results against targets should also be adopted as standard practice. Secondly, attracting, retaining and developing talent is a key goal. Hence, the recruitment strategy should clearly target the Department’s needs. Thirdly, financial factors will be key drivers of Portu-gal’s performance going forward. Institutional changes linked to Banking Union will shape the role of Banco de Portugal. Hence, financial intermediation and European financial integration should be key priorities over the medium term. Fourthly, excellence in research should be continued. Finally, the Department is at the center for Banco de Portugal’s institutional publications. Publica-tions should be clearly structured, targeted, focused, and streamlined.

Hence the Commission submits a number of recommendations and suggestions. The main rec-ommendations are included in this Executive Summary. The complete list of recommendations and suggestions is included at the end of the Report. The main recommendations concern the management and internal organization as well as some of the Department’s main outputs.

Main recommendation 1 Set up an accountability frameworkGiven the long lead times associated with research and analytical work DEE should develop an accountability framework. The framework would allow the Department to account for its use of resources in fulfilling its tasks and functions. The accountability framework should encompass the full programming cycle: planning, monitoring, evaluation, and communication. Annual plan-ning of activities should build on the priorities defined in Banco de Portugal’ strategic planning and define deliverables and key performance indicators to evaluate progress. Research activities and analytical work should be programmed on the basis of clear rules and taking into account the Bank’s priorities. Information on the planning and programming of activities should be avail-able to all staff.

The accountability framework requires that metrics are available to measure the quantity and quality of work produced. In many cases it will be necessary to ensure systematic feedback from relevant stakeholders. That will be certainly the case for policy work and the provision of consul-tancy work by DEE to other departments of the Bank.

Conducting regular external evaluations of DEE could be part of the accountability framework.


Main recommendation 2 Improve human resource management Human resources are the Department’s key asset. Attracting, developing, and retaining talent is a key managerial challenge. Human resource management should be integrated with the accounta-bility framework so as to ensure full alignment of purpose. Such alignment should include the clear setting of performance goals so as to ensure objectivity in the ex post evaluation of performance.

In the Commission’s view it is important to develop a framework allowing for professional devel-opment and career progression. Banco de Portugal could consider the possibility of opening an advisory career path that would parallel the current managerial path. The advisory career path would be open to excellent professionals. It would be open to a select few focusing on policy work, as well as to highly productive researchers. In any case, the Commission is of the view that the rules applying to promotion of researchers should be clearly defined and communicated. One important aspect is that sufficient research time should be guaranteed. In particular, econ-omists recruited directly after completing their PhD should be given a period of time where they would be (almost) exclusively focused on getting their papers published.

The Banco de Portugal could consider setting up a system aimed at identifying high potential staff. The management of these careers should involve internal and external mobility.

In the view of the Commission efficiency in research and analytical work could substantially improve if DEE would make use of Research Analysts who could perform a large number of routine tasks, thereby enabling staff to concentrate on more demanding tasks.

Main recommendation 3 Identify financial intermediation and European financial integration as the priorities for the next three years and create a Financial Intermediation DivisionThis Commission is of the view that financial intermediation and European financial integration will be crucial for Banco de Portugal and for the country in the next years. Firstly, the changing financial structure will be a fundamental factor shaping trends and performance in the Portu-guese economy. Secondly, Banking Union will imply that decision-making on micro and macro prudential will approach the Eurosystem standard for monetary policy.

Consistent with this, “Financial stability in the European context” is the first of four strategic guide-lines set by Banco de Portugal for the next three years. The Department can contribute to the strategic goal in a number of different ways.

It should enhance the analysis and forecasting of the Portuguese economy through the explicit modeling of the financial factors. It should also contribute to the estimation of monetary and credit conditions in Portugal and the understanding of the monetary transmission mechanism. A broader issue is the evolution of financial intermediation in Portugal in the context of a financial transformation in Europe. For this purpose it is crucial to explore synergies inside DEE.

In the area of financial stability it is particularly critical that policy advice by Banco de Portugal staff is organized as an inter-departmental process so as to ensure that information, knowledge and a


diversity of views are adequately reflected in the process of reaching an institutional position. DEE should thus cooperate intensively with other business areas of the Bank. It should produce relevant research and provide analytical instruments and policy analysis to the macro and micro prudential departments. It should also be an active participant in the editorial process leading up to the Finan-cial Stability Report, which should continue to be led by the Financial Stability Department.

In order to allow DEE to build the necessary capacity to contribute to these key priorities, the Commission recommends the creation of a Financial Intermediation Division in DEE.

Main recommendation 4 Pursue excellence in researchOn research the Commission is of the view that the path of excellence should be pursued further. Research should aim at publication in leading edge scientific journals. Clear career incentives for productive researchers are fundamental. Another important contribution would be the adop-tion of a point-system for classifying scientific publications and to quantify research work. Such indicator would be used when assessing staff performance. The Commission would suggest that a system similar to the one used by the ECB could serve this purpose. It is also important to explore synergies between research and policy work.From this viewpoint, clear signaling of priority areas for Banco de Portugal as a policy-making institution would be particularly valuable.

Main recommendation 5 Rethink communication On the contribution of DEE to external communication, the Commission is of the view that some re-thinking would be appropriate in order to improve targeting and focus. In particular commu-nication policy should identify the targeted groups, their demands and the purposes of commu-nication. Quarterly Economic Bulletin has become the Banco de Portugal’s flagship publication. It is now the main vehicle of dissemination of the central bank’s views on the current situation and prospects for the Portuguese economy. It is the main vehicle of communication with the general public. The Commission suggests one senior economist of the Department should be entrusted with the task of editor of Quarterly Economic Bulletin. That would facilitate the transition to a simpler and more direct style of communication. The production process should be associated with internal procedures aimed at early debate of the overall assessment and relevant policy messages. Quarterly Economic Bulletin articles should be accessible to a wide audience and focus on relevant topics for the policy debate.

The Commission is also of the view that the Annual Report could make a complete transition to a standard corporate Annual Report format. In the same vein Indicadores de Conjuntura could be limited to factual tables and charts. The release of Coincident Indicators could be accompanied by a devoted press release.

On the research side, Working Papers should be the series to disseminate research done at Banco de Portugal. The aim would be early dissemination of analytical work that would potentially be published in top-level scientific journals. Working Papers should be submitted for publication in


academic-refereed journals. The series should be the responsibility of DEE but open to submis-sions from staff of other departments.

Other analytical work could be disseminated in a new series: Staff Technical Notes. This new series would contain the background analytical work behind some Quarterly Economic Bulletin articles to be published. It would also replace the Occasional Papers that would be discontinued.


IntroductionThe Report is the first strategic review of the Economics and Research Department of Banco de Portugal. Strategic reviews of research activities in policy-making organizations are becoming standard practice. In a number of cases, it has been decided that such strategic reviews will be conducted on a regular basis.

The scope of the Report is wide. It reflects the mandate given to the Commission. The report covers research activities conducted in the Economics and Research Department of Banco de Portugal. Research is here understood as the production of pieces of analysis with the potential to be published in good academic refereed journals. In doing so it follows a considerable number of recent evaluation reports. Excellence in research is important in any policy-making institution. It is particularly so for national central banks (from here on “NCB”) participating in the Eurosystem. In times of crisis, high quality research is even more important as the conduct and operation of policy deviates from well-trodden paths.

For research publications and for institutional publications the Commission assesses their quan-tity, quality, relevance and impact. For research activities the evaluation of quantity, quality and relevance follows a practice that has become standard in recent years.

But the mandate of the Commission is considerably broader than research. It includes the evalu-ation of other activities that are at the core of the Department. Namely, policy advice in the context of the Eurosystem and the European System of Central Banks (in particular on monetary policy); advice on financial stability (both at national and at European level); advice to the Gov-ernment on the conduct of economic policies in Portugal; and other pertinent issues of central banking policy. The mandate also involves evaluating the Department contribution to the Bank’s institutional publications (including the Annual Report and the Quarterly Economic Bulletin). The Department represents Banco de Portugal in a large number of Eurosystem structures. It also ensures representation in the European Union (from here on “EU”), Organization for Economic Co-operation and Development (from here on “OECD”) and the Eurostat. Last but not least the Department contributes to the capacity of Banco de Portugal by attracting, forming and retaining human resources.

The Banco de Portugal is a member of the Eurosystem. The primary objective of the Eurosystem is to maintain price stability. In order to do so, the Eurosystem defines and implements the sin-gle monetary policy. The Eurosystem is governed by the decision-making bodies of the ECB: in particular the Governing Council and the Executive Board. The NCB, including Banco de Portugal, are an integral part of the Eurosystem and act in accordance with the guidelines and instructions of the ECB.

The financial architecture of the euro area and of the EU was transformed by the Global Crisis. The creation of the Single Supervisory Mechanism places the ECB at the center of banking regula-tion and supervision. The European Systemic Risk Board has a complementary role in the area of macro-prudential policies. In any event the Governing Council is likely to be at the crux of the new procedures. Hence, there is now some parallelism between the decision-making procedures for monetary policy and financial stability. Given that the Governor is member of the Governing Council the organization of decision-making puts the Governor at the center of Banco de Portu-gal’s participation in the Eurosystem.

According to the most recent version of its organic law, the Banco de Portugal has extensive domestic competences in the area of financial stability and banking. Specifically, Banco de Por-tugal is responsible for the stability of the Portuguese financial system; Banco de Portugal is


responsible for the definition and implementation of macro-prudential policy; Banco of Portugal is responsible for banking supervision; and, finally, Banco de Portugal is the national resolution authority in the country.

Last but not least, Banco de Portugal also has the task of advising the Portuguese government in matters of economic and financial policy.

The international institutional activity of Banco de Portugal is concentrated in Europe. About 2/3 of the total number of international institutional meetings in which the Banco participates are meetings of the various structures of the Eurosystem. The share increases to about 90% when other EU structures are added. The remainder meetings refer to various committees and working groups that function in the context of the International Monetary Fund (from here on “IMF”), the BIS and the OECD.

The Economics and Research Department contributes to the international representation of Banco de Portugal. In particular, the Economics and Research Department contributes to the policy work of Banco de Portugal in the context of the Eurosystem. It provides advice on monetary policy. It participates in the Monetary Policy Committee and its Working Groups. In this context it participates in the Eurosystem Staff Macroeconomic Projections exercises (see Box 2). In the area of financial stability, the Economics and Research Department produces extensive analysis pertaining to macro and micro adjustment and stability.

Domestically, Banco de Portugal cooperates with other financial supervisors. In this domain the National Council of Financial Supervisors, chaired by the Bank, is particularly important. Banco de Portugal cooperates with the Statistics Portugal (from here on “INE”) as part of the National Statistical System. Banco de Portugal also acts as economic adviser to the Government in matters of economic and financial policy. It also cooperates with the Ministry of Finance and the Court of Auditors in matters relative to fiscal policy.

In the context of the sovereign debt crisis in the euro area and the Portuguese adjustment pro-gramme (2011-2014), Banco de Portugal contributed constructively to the various pillars of the programme. That role was particularly focused on financial stability, in general, and on the bank-ing system, in particular.

The Economics and Research Department also produces in-depth analysis and research of struc-tural features of the Portuguese economy. The goal is to contribute to better information and understanding, improving the quality of the policy debate, and, ultimately, contributing to better policy-making. That role was particularly intense during the run-up and execution of the adjust-ment programme.

For policy, representation and advisory work the Commission based its evaluation and recommen-dations on publicly available material especially the institutional publications of Banco de Portugal. This basic information was supplemented by a number of initiatives. Specifically, the Commission:

• Conducted a large number of structured interviews. It interviewed key stakeholders and all Department staff;

• Relied on questionnaires sent to users of publications released by Banco de Portugal;

• Used a media survey as a measure of broad public relevance and impact;

and

• Used data on access to the various documents from Banco de Portugal’s web site.

The Commission findings are presented in the following sections.


PART 1. ActivitiesBanco de Portugal has three main functions. Firstly it is a member of the Eurosystem. This member-ship derives from its role as central bank of the Portuguese Republic. Secondly, it has far-reaching responsibilities in the area of financial stability and supervision of credit institutions. Thirdly, it advises the Government on economic and financial policy. The Economics and Research Department con-tributes to all these areas of Banco de Portugal’s activity.

1. Participation in the Eurosystem

Banco de Portugal is a member of the Eurosystem. This brings a set of responsibilities that are defined in the Statutes of the European System of Central Banks and of the European Central Bank (from here on “Statutes”) and in the Organic Law of Banco de Portugal.

Box 1: Decision-making in the Eurosystem2

The Eurosystem is comprised of the European Central Bank (from here on “ECB”) and the NCB of the EU Member States that have adopted the euro.

In accordance with Article 8 of the Statutes, the European System of Central Banks (from here on “ESCB”) it is governed by the decision-making bodies of the ECB. The decision--making process is thus fully centralised. Article 9.3 of the same document defines that the ECB’s decision-making bodies are the Governing Council and the Executive Board. Articles 10 and 11 of the Statutes of the ESCB and of the ECB describe how each decision-making body operates and Article 12 defines their responsibilities. Under Article 12.1 “The Gover-ning Council shall adopt the guidelines and take the decisions necessary to ensure the per-formance of the tasks entrusted to the ESCB under these Treaties and this Statute. The Governing Council shall formulate the monetary policy of the Union (...). The Executive Board shall implement monetary policy in accordance with the guidelines and decisions laid down by the Governing Council. ( )” Article 12.2 indicates that the Executive Board prepares the agenda for the Governing Council’s meetings.

The Eurosystem’s decision-making process comprises three key phases: the preparation phase, the decision phase and the implementation phase.

The decision phase involves both the Executive Board and the Governing Council. The Governing Council comprises all the members of the Executive Board and the governors of the Eurosystem NCB.

The NCBs, as such, have an active role in the preparation and implementation phases.

The preparation phase involves the technical contributions of the ESCB / Eurosystem’s staff and Committees. The goal of this phase is to gather information and achieve consensus. Each Committee has a set mandate that defines what contribution should be prepared as input for the decision-making process. The Committees are authorised to delegate work of a more technical nature to Working Groups with a specific mandate or to task forces that remain operational until the task is complete. The Economics and Research Department represents Banco de Portugal at the Monetary Policy Committee and its sub-structures.

In the implementation phase, the NCB carry out the Governing Council’s decisions. The Exe-cutive Board is responsible for giving the NCB the instructions needed for this. DEE is not involved in the implementation phase.

2. This Box was based on Occasional Paper No 79 published in the ECB’s Occasional paper series (“The Workings of the Eurosystem – Monetary Policy Prepara-tions and Decision-Making – Selected Issues”, by Phillipe Moutot, Alexander Jung and Francesco Paolo Mongelli).


Banco de Portugal’s international activity focuses mainly on the ESCB / Eurosystem, as would be expected (Table 1.13). In 2013, Banco de Portugal took part in 480 face-to-face meetings and 275 conference calls in that particular field, which represents approximately two-thirds of the total.

DEE’s international activity has an important role for Banco de Portugal. It took part in 53 meet-ings and two conference calls with the main bodies of which it is a member, also focusing on the ESCB / Eurosystem (Table 1.2). In total, DEE’s representation work is spread across approximately 30 groups and over 20 representatives.

Among these is the work in the Monetary Policy Committee (from here on the “MPC”). The MPC is one of the technical Committees making up the Committee structure of the ESCB / Eurosystem. As mentioned in “Box 1”, the MPC takes part in the preparation phase for the Governing Council’s decisions. In this regard, the most important decisions are those relating to monetary policy. “Box 2” looks at the preparation of macroeconomic projections, one of the elements used by the Governing Council in taking monetary policy decisions. The MPC supports the Eurosystem in set-ting the single monetary and exchange rate policy for the euro area, contributing among other things to:

• Analysis of topics related to the conduct of monetary policy in the euro area;

• Research on the instruments underlying the analysis of the current economic, monetary and financial situation;

• Preparation of a set of macroeconomic projections for the euro area as a whole;

• Exchange of opinions and information on the economic, monetary and financial situation from a euro area perspective;

• Analysis of the overall performance of the Eurosystem’s monetary policy operational framework.

• There are three Working Groups under the aegis of the MPC, namely, the Working Group on Public Finance (WGPF), the Working Group on Forecasting (WGF) and the Working Group on Econometric Modeling (WGEM). DEE also takes part in certain research networks and in some research groups on a voluntary basis.

In order to assess DEE’s activity, surveys were conducted, which were submitted to some mem-bers of the Eurosystem staff4. According to their responses5, DEE’s participation is deemed to be of high quality in its contribution (i) to the technical debate at regular meetings, (ii) to the devel-opment of new methodologies and (iii) to the peer-review of macroeconomic and fiscal projec-tions. The analysis and presentation of the developments in the Portuguese economy were also assessed as positive, specifically in terms of (i) the quality of the statistical information and the transparency of the information provided, (ii) the technical quality of the analysis of past develop-ments and the macroeconomic and fiscal projections and (iii) the ability to provide insights into the macroeconomic, financial and fiscal developments in the Portuguese economy.

3. See Charts and Tables.4. ThisgroupincludesstaffthatparticipatesinWorkingGroupsandCommitteeswithDEErepresentatives.5. Theconclusionsdrawnshouldtakeintoaccountthelownumberofresponsestothissurvey.


Box 2: Preparation of macroeconomic projectionsPreparation of the macroeconomic projections by the Eurosystem staff is one example of the way the Eurosystem Committees contribute to the preparation of the monetary policy decisions.

The macroeconomic projections for inflation, GDP, fiscal variables and other macroeco-nomic variables for the euro area are produced twice a year by the Eurosystem staff, with ECB staff exclusively producing two further projections a year. The macroeconomic projections are an analytical tool that condenses a broad information set on current and future economic developments. They provide an insight into the most probable scenario for the euro area over a two-year time horizon6. The preparation of the macroeconomic projections involves complex interaction between the ECB and the NCB.

2. Policy advice to the Governor of Banco de Portugal

As explained in “Box 1”, the Eurosystem is managed by the decision-making bodies of the ECB: the Governing Council and the Executive Board. The Governor of Banco de Portugal is a member of the Governing Council. In this capacity, the Governor operates fully independently, in accordance with the ECB’s mandate and objectives.

DEE’s tasks include providing the Governor of Banco de Portugal with high-quality advice on mon-etary and financial policy. The quality and relevance of the arguments produced is a key element for the Governor’s performance in the Governing Council.

The Governing Council usually meets twice a month. In the first meeting of each month it analy-ses the economic and monetary developments and takes monetary policy decisions. In the sec-ond meeting usually it tackles issues related to other tasks and responsibilities of the ECB and the Eurosystem7. Furthermore, the Governing Council also schedules steering debates on background issues, for example the examination of the monetary policy strategy in 2003.

The policy advice activities undertaken by DEE may be broken-down into those that are carried out as part of the preparation for the Governing Council meetings and a heterogeneous set of other policy advice activities. The latter may be considered in the context of the advice given to the Gov-ernment on economic and financial matters.

DEE’s support activities related to the Governor’s participation in the Governing Council include: (i) the monthly monetary policy briefing, (ii) the bimonthly discussion of monetary policy topics and (iii) the quarterly discussion of the projections for the Portuguese economy.

Each month a briefing with the Governor takes place as part of the preparation for the Governing Council’s monetary policy meetings. At this meeting, DEE summarises the developments of the prior month and suggests the direction to follow in the conduct of monetary policy. The presentation is based on a document called the “Euro area policy brief” and a booklet with a statistical appendix (“Background information”), which includes a broad set of economic indicators. In the current ver-sion, the briefing’s format also allows for a discussion between the Governor and the DEE team.

6. This horizon was extended to three years in March 2014.7. InJuly2014theECBadjustedthescheduleofmeetingsoftheGoverningCouncil.TheGoverningCouncilmeetingsdedicatedtomonetarypolicywillchange to a new six-week cycle, from January 2015. The meetings not dedicated to monetary policy will continue to be held at least once a month.


Indeed, following a direction from the Governor8, since February 2012, a significant change took place in the organisation of the technical debate on monetary policy. Special sessions were included on monetary policy topics. These sessions are now held six times a year.

Interviews held with Governors and members of the Board of Directors of Banco de Portugal have indicated that the monthly briefing held by DEE is a valuable contribution. The support documents are timely produced and well organised.

In certain cases, DEE’s contribution to the policy debate was particularly relevant. Two examples: (i) the critique of the role of the M3 monetary aggregate in the ECB’s monetary policy strategy and (ii) the risk assessment methodology associated with the macroeconomic projections for the euro area.

DEE also holds a quarterly presentation and discussion on projections for the Portuguese economy with the member of the Board of Directors responsible for DEE and thereafter with the Governor. This discussion is based on the forecast report (Relatório de Previsão). This document presents the interna-tional context assumptions for the projection exercise and the comparison with the prior projection exercise. Furthermore, the document sets out the current projections and those of the prior projection exercise (and the difference between them), for a set of macroeconomic and fiscal variables.

Other policy advice activities include: (i) the weekly report on economic and fiscal developments, (ii) the quarterly presentation of the unsigned text for the Quarterly Economic Bulletin, (iii) the discus-sion of topics on the Portuguese economy, (iv) the discussion of the articles presented at Jackson Hole and (v) the presentation of the Board of Directors’ Annual Report on the Portuguese economy.

The weekly report on economic and fiscal developments is presented at the Internal Markets Meet-ing with the Board of Directors. This report is based on a data set that is updated whenever new information is released. A booklet providing economic information (Informação de Conjuntura) is updated with data released by INE, among other sources. The booklet “Information on public finances” is updated using the Directorate-General for the Budget’s monthly bulletin and INE’s quar-terly and annual national accounts.

Concerning the unsigned text for the Quarterly Economic Bulletins and the Board of Director’s Annual Report on the Portuguese economy, DEE prepares presentations highlighting the key points of the texts. These are delivered respectively to the member of the Board of Directors responsible for DEE and the Board of Directors of Banco de Portugal.

The discussion of topics on the Portuguese economy takes place twice or three times per year.

3. Research

Analytical work at DEE takes different shapes. Some of it is closely tied to the policy debates of the day and is best described as policy work because it provides input to the policy advising function. Its quality is partly assessed by the usefulness that this analysis has to other bodies and structures of Banco de Portugal. Another part consists of applied research on Portugal, which is closely linked to Banco de Portugal advisory role on economic and financial policies. Much of this research ends up being published in academic journals, but its ultimate goal is to advance our knowledge of the Portuguese economy. Finally, there is academic research, whose ultimate intent is to advance eco-nomic knowledge, and so whose success is measured by publication in peer-reviewed scientific journals and subsequent citations. Academic research helps to establish the Bank’s reputation,

8. Thesemeetingswereintroducedbecausethemonthlymonetarypolicybriefingmeetingswereinsufficienttodebaterelevantmonetarypolicyissues.


it often provides the foundations for the other two research goals, it allows the DEE to attract the top-notch researchers that can do the other tasks, and it provides an important public good for the country. Moreover, and this should be emphasized, it is the commitment to research that provides the unifying deontological perspective that unites the whole Department in its multiple functions.

All of these types of analytical work are mixed within the DEE. There is no clear distinction between either the people who are supposed to engage in one versus other forms of work, or between how these different activities should be differentially stimulated. In many ways, this is a good setup, and some level of mixing is surely optimal. Central banks are precisely institutions where interaction between these three strands of research work should exist and be fostered, with gains for the quality of each of the three types.

Moreover, when we surveyed economists at the bank, 90 % replied that the regular publications of the Banco de Portugal are either essential or important for their work. An overwhelming number reported consulting these publications, and may do so very often. Therefore, even internally, there is great demand for the Bank’s publications, and acknowledgment of their usefulness.

For the purposes of this report, we separate research stricto senso as analytical work aiming at meeting the requirements for publication in good academic refereed journals. Therefore, in this section we concentrate on publication in academic journals and working papers. This creates some difficulties with evaluating the DEE, since many of its staff members perform analytical work that is not ultimately published in academic outlets. Because there is no clear separation within the Depart-ment between researchers and others, it is hard to measure research output per researcher, as opposed to research output per economist, as we will do below.

3.1. Publications in academic journalsBetween 2000 and 2013, the economists at the DEE published 172 papers in refereed journals. Chart 3.19 shows the evolution of those publications over time, both in raw terms, as well as weight-ing each publication by the quality ratings of different journals used by the ECB. Box 3 describes briefly the grading system of the ECB. Chart 3.1 shows an upward trend, with the years since 2008 having significantly more articles published. On average, the number of publications as a ratio of number of staff members with a PhD is in line with the output at the ECB.

Box 3: ECB points system for publications The ECB follows a points system for publications. Publications in what are deemed top general interest journals are placed in tier 1* and given 12 points (6 journals), with top field journals in core policy areas and other very good general interest areas placed in tier 1 and receiving 10 points (7 journals). After that, a publication in a tier 2 receives 5 points and includes other good general interest journals as well as top field or policy journals in rele-vant areas (24 in total), tier 3 has 2 points for other journals in not core areas and other field and general interest journals, and finally 1 point for tier 4 which includes all other journals. The full list of ranking of economic journals is in Charts and Tables. The rankings are revised every three years (we used the 2011 categories) and co-authorship is discounted by weigh-ting the points by 2/(1+N), where N stands for the number of authors. Finally, “papers and proceedings” or non- or lightly-refereed contributions to journals are ranked one tier below the journal itself. The list of economic and financial journals can be found in Table 3.1.

9. See Charts and Tables.


There are quite a few high quality publications, with 19 out of the 172 articles published in tier 1 and tier 1* journals. Moreover, well below half of the articles (62) were published in tier 4 journals. The economists at the Bank are being adequately ambitious, sending their papers mostly to vis-ible journals, instead of yielding to the temptation to publish wherever.

Turning next to measures of impact of these papers, we were able to find citations in Web of Sci-ence to 63 % of these published articles, again a respectable number. The total number of citations is 767, but only 32 articles received more than 5 citations, and only 10 have more than 20 citations. Again, this is not an unusual pattern for research departments, including academic ones.

We can also look at the most widely cited articles per year since publication to ensure that they are in topics of relevance to the Bank. We find that they study the unemployment rate (Blanchard and Portugal), the distribution of firm entry (Mata and Portugal), and the use of single or multiple banks by firms (Farinha and Santos)10. All of these use Portuguese data and inform important policy debates in Portugal. They are all very good examples of what central-bank based research can and should produce.

An alternative assessment of impact is provided by the website research repository IDEAS. It pro-duces rankings of the top institutions producing economic research in Portugal, based on num-ber and quality of publications, as well as on downloads and citations. The Banco de Portugal con-sistently appears as one of the top two institutions in Portugal, together with the Nova School of Business and Economics, and with the third-ranked institution behind by a considerable distance.

In terms of fields covered in these publications, Chart 3.2 shows that, unsurprisingly, macroeco-nomics and monetary economics is the main field of focus. The closely associated field of math-ematical and quantitative methods comes second, while the Bank of Portugal seems to have a specific strength in labour economics, which is less typical in central banks. This strength is also evident by looking at the keywords in the articles published where, after the boilerplate “econo-metric / statistical”, the most prevalent keywords were “employment / unemployment”. When asked in a survey what were the main areas where the working papers were more influential and useful, the Bank’s staff points to three main areas: employment / unemployment, macroeconom-ics and public finances.

Looking at the distribution not across fields, but across authors, Chart 3.3 shows a high concen-tration of research output. As usual, a few economists account for a large fraction of the total number of publications and citations of the Department: Pedro Teles, Pedro Portugal and Isabel Horta Correia alone account for 136 of the total 393 points in the ECB scale for the entire DEE. This should not be a concern, as the market for research output is well known to have a “star” structure. In terms of the internal organization of the Department, the 10 top economists (not all of which are predominantly researchers) account for 56 % of all the Web of Science citations accrued.

The fact that 28 of the 76 economists who worked in the Department during the period under analysis have not published a single article deserves some attention. While it is normal to have a few members that are more devoted to other tasks, or that are at a different stage in their careers, it is not desirable such a large share of non-publishing economists in an economics and research department.

10. ThearticlebyBlanchardandPortugalcameoutasworkingpaper1998-03andpublishedintheAmericanEconomicReview,2001;theonebyMataandPortugalwasWP2001-01andpublishedintheStrategicManagementJournalin2002;theonebyFarinhaandSantosnevercameoutasWorkingPaper and was published in the Journal of Financial Intermediation.


3.2. Working PapersThe working papers series of DEE published 227 working papers between 2000 and 2013. Graph 3.4 shows the evolution of the number of published working papers per year. There isn’t as pro-nounced an upward trend as in the case of peer-reviewed publications indicating a slight uptick in the number of working papers that are eventually published in journals.

Compared with the typical Federal Reserve Bank, the number of publications is smaller but not by much: at one extreme we have the Federal Reserve Bank of New York, which produced regu-larly more than 60 working papers per year over the past decade, and at the other extreme, the Federal Reserve Banks of Atlanta, with approximately 24, and Kansas City with approxi-mately 14. Relative to other central banks in the Eurosystem, the performance is quite good. For countries similar in population size, the Bank of Finland produced 31 working papers on average over the last decade, the National Bank of Belgium 18, the Bank of Greece 16, the Oes-terreichische Nationalbank 10, and De Nederlandsche Bank 9. At roughly 20 working papers per year for, on average, slightly less than 50 economists, DEE produces one paper every two and a half years. By comparison, at the recent evaluation of the Banco de España, concern was expressed over there being on average one working paper put out per researcher every two years. In the view of the Commission, this is not so much an indication of low productivity by the economists at DEE, but rather that they are not all publishing their research work in the working paper series.

Looking at the journals where working papers were eventually published, we detected two pat-terns that deserve some attention. First, less than half (75) of the peer-reviewed publications by DEE economists (172) were included in the Banco de Portugal working paper series. Working papers should be the main outlet for the academic output of the DEE, and would be a natural metric to judge their output in real time, as they are more immune to delays in publications.

Second, 92 of the 211 working papers were never published elsewhere, neither in peer-reviewed journals, nor in other Bank publications, and excluding publication in other working paper series, the number rises to 102. As the title indicates, a working paper should reflect work in progress that is going to be published shortly in a final outlet. Yet, some economists at DEE use the work-ing papers as a final stop for their research. It should be noted that this is not only a problem at DEE. The IMF’s most recent evaluation report also noted that only about one third of their working papers were published within three years of being released. The comparable numbers at the ECB or at the Federal Reserve Banks in the United States are significantly higher.

The Commission selected a random sample of the working papers and read them to assess their contribution. The quality was variable, with some of the work being of top-notch quality, either as pieces of academic or applied research, while some other working papers were of distinctly lower quality, and were not publishable either at an academic journal or at Quarterly Economic Bulletin. Papers are accepted for publication at the working paper series without being subject to referee-ing, and after some very mild editing by one editor external to the Bank.

From the Commission’s conversations and interviews with different members of the Bank, it was clear that there is some confusion about the role of the working papers. Some criticized them for dealing with topics that are not relevant to Portugal. Yet, it is the nature of the exploratory work in academic research that some of it may be more theoretical, or even applied to other countries, as knowledge is being accumulated on an area before it reaches a stage where it can be applied to the country’s problems. Others worried that the conclusions in the working papers might sometimes be in contradiction with the official policies of the Bank. Again, this is to be expected of the more academic inclined work, and should never be discouraged at the risk of losing the DEE’s important role of exploring policy alternatives. Finally, some worried that the


working papers did not have any relevant impact in public debates. This is connected to the use of working papers as final stops for research. If, as it should be, the release of a working paper is only an intermediate step in the research process before its ultimate publication elsewhere, this issue would be moot.

4. Regular publications and communication

4.1. Regular publications DEE produces various publications on a regular basis, with different audiences in mind. In this sec-tion we assess the impact of these publications on these various audiences, and DEE’s contribution to raising the quality of the economic information and the public debate in Portuguese society.

4.1.1. Regular publications produced by DEEIn the period under review, DEE was responsible for producing the following regular publica-tions (i) the Board of Directors’ Annual Report – The Portuguese economy11 (from here on the “Annual Report” or the “AR”), (ii) the Quarterly Economic Bulletin (from here on also “QEB”), (iii) the Financial Stability Report (from here on also “FSR”) and (iv) the Monthly Economic Indicators (from here on also “MEI”). These publications are made available through Banco de Portugal’s institutional web-site. Paper versions of the QEB and the AR are also published. The MEI have been available in electronic format only since January 2014.

The Annual Report presented a detailed analysis of the Portuguese economy’s development over the previous year, with the goal of framing that behaviour within a structural perspective and comparing it to other economies.

The Quarterly Economic Bulletin is a publication that aims to present regular analyses of the Portu-guese economy, including “Special Issues” and Boxes which discuss relevant and timely economic policy themes. The QEB also contains signed articles, frequently of a more analytical nature.

In 2014, alterations were made to the April Quarterly Economic Bulletin and the Annual Report. The April 2014 Quarterly Economic Bulletin includes detail on the performance of the Portuguese economy in 2013, replacing the longer text that was traditionally published with the AR. Further-more, the release of the 2014-2016 projections was brought sooner to March12, to comply with the Eurosystem’s publication rules13. The April QEB thus simply reproduced the March projec-tions.

In turn, the Annual Report, published at the end of May, focuses mainly on structural issues, as the developments in 2013 had already been analysed in the Quarterly Economic Bulletin of April. A first part aims to explain the low trend growth in the Portuguese economy in the most recent period and also to present three issues that are particularly relevant in the current national context: the

11. Uptothe2010edition,asingleBoardofDirectors’AnnualReportwasproduced,containingtwosections:afirstpartondevelopmentsinthePor-tugueseeconomy,draftedbytheDEE,andasecondpartonBancodePortugal’sactivityandaccounts,compiledbytheOfficeoftheGovernorbasedondepartmentalcontributionsregardingactivityandfromtheAccountingDepartmentregardingtheaccounts.Fromthe2011editiononwards,twoBoardofDirectors’Reportswereproduced:“AnnualReport:ActivitiesandFinancialStatements”and“ThePortugueseEconomy”.TheDEEretainsresponsibilityforproducing the report on the Portuguese economy.12. In March this year, the DEE published a separate document of projections for the Portuguese economy for the current year and the following two years. This document will be published yearly.13. Eurosystem rules do not allow national central banks to publish projections in the period running from two months before the publication of the Eurosys-tem Staff Board Macroeconomic Projection Exercise (BMPE) and one month after its publication (unless they are published simultaneously with the BMPE).


deleveraging process, the functioning of the labour market and recent institutional reforms in the European Union. In the second part there is an overview of the Portuguese economy’s ongoing adjustment process.

The Monthly Economic Indicators include a summary and tables and charts that cover the most impor-tant indicators for Portugal and the international economy (particularly in terms of the euro area).

Up to 2013, DEE also produced the Financial Stability Report. However, with the creation of the Financial Stability Department this responsibility was transferred to the new department, despite benefiting from DEE’s contributions. This publication includes the risk assessment for the Portu-guese financial system.

4.1.2. Release and impact of DEE’s publications in the mediaWith the goal of measuring the impact and the users’ assessment of DEE’s publications, the Evalu-ation Commission commissioned an impact study on the media, carried out by the company Manchete, surveyed the publications’ users, gathered information on the number of pageviews of the publications on Banco de Portugal’s institutional website and held interviews themed on the publications14. The study carried out by Manchete focused on Banco de Portugal’s publications and ran from October 2006 to December 201315. The survey of the publications’ users aimed to learn about a selected sample of the users of DEE’s publications and covered DEE’s publications and a number of publications of the Statistics Department16. Data on pageviews relate to publica-tions produced by DEE and cover the period from January 2012 to 30 April 201417.

Data reported and the respective conclusions must be read with caution, insofar as the analysis contains a number of important limitations18. Still, certain relevant conclusions result from the analysis of the information gathered.

Firstly, DEE’s publications have a high impact, which increased sharply in the period under review. The total number of news items on DEE’s publications doubled from around 950 in 2007 to around 1,900 in 2013 (Chart 4.119).

14. Someof thequestionsasked in the interviews focusedon theusage frequencyandrelevanceof theDEE'spublicationsandanysuggestions forimprovingthepublications.15. Note that the last quarter of 2006 was excluded from the analysis in order to use full-year data only. The research includes publications for which the DEEandtheStatisticsDepartmentareresponsible.TheDEE'spublicationscoveredwere:theQEB,theAR,theMEI,theFSR,theBankLendingSurveyandResearch / WorkingPapers.FromtheStatisticsDepartment’spublicationswereincludedtheStatisticalBulletinandtheCentralBalance-SheetStudies.SomeofBancodePortugal'spublicationswerenotcoveredbyManchete'sresearch:theMarketConductSupervisionReport,thePaymentSystemsReport,theBulletinonBanknotesandCoins,amongothers.Manchete'sstudyaimstounderstanddevelopmentsintheexposureofBancodePortugal'spublicationsinthemedia,assessingamongotherthingstheevolutionofnewsproducedovertheperiodunderreview,theimpactofthenewsproducedandthekindofnewsmediaused.16. Thesurveyincludedquestionsonthefollowingpublications:theQEB,theAR,theMEI,theFSR,theStatisticalBulletin(fromtheStatisticsDepartment),theQEBandFSRarticlesandWorkingPapers.Thequestionsaimedtoanalyseusagefrequencyofthepublications,theformatusedforconsultation,itsrelevanceandspecificinformationconsulted,amongotheraspects.SomequestionswerealsoaskedaboutconferencesandseminarsheldbytheDEEandonitsrelationshipwithotherdepartments.Inparallel,afewquestionsweresenttoagroupofEurosystemstaffmembersonDEE’sparticipationincommittees and working groups that DEE takes part in.

Thenumberofsurveyssentwas249andthenumberofresponsesamountedto71.17. Informationwasanalysedon:theQEB,theAR,theFSR,theMEIandtheCoincidentIndicator.Informationforonecompleteyearofpageviewswasusedforthepublications.From16February2012and30March2012therearenoavailablepageviewdata.18. ThelimitationsofreporteddataconcernManchete’ssurvey,thesurveyssentandpageviewdata.

WithregardtoManchete’ssurvey:(i)theOTSmeasureisonlyasummaryindicatorofprintmediaanddoesnotmeasuretheimpactofothermediaand(ii)thestudyonlycoversBancodePortugal’spublicationsthataretheresponsibilityofDEEandtheStatisticsDepartment,andexcludespublicationsofotherDepartments.

Withregardtothesurveyssent:(i)thenumberofresponseswassmall(71outof249surveyssent)and(ii)averysignificantnumberofresponseswerefromDEE’sstaff(33)andacademics(15).

Asregardspageviewdata,informationisonlyaccessiblefromJanuary2012onwards,andtherearenoavailabledatabetween16Februaryand30March2012.19. See Charts and Tables.


The number of pageviews for the AR, the QEB, the FSR and the MEI exceeded 100,000 in 2012. For the period as a whole, the opportunities-to-see (from here on “OTS”20), a summary measure for print media, reached 119 million.

According to the user survey, the publications are used mostly to obtain general information on eco-nomic and financial matters, to produce reports and for research. Around 90 % of the respondents attribute a high or average importance to Banco de Portugal’s regular publications for their work.

Secondly, we concluded that in relative terms the Quarterly Economic Bulletin stands apart clearly as the seminal publication. Its importance has increased over time across all media (Chart 4.2). The QEB is the subject of more news items when compared to other regular publications (67 % of the total in 2013, versus 41 % in 2007) (Chart 4.3); it receives a high number of pageviews (around 7,000 per QEB) (Chart 4.4); and is also mentioned by the users as the publication most frequently consulted, accord-ing to the survey of users of Banco de Portugal’s publications (85 % of respondents use the QEB at least once a quarter) (Chart 4.5). Analysis of the OTS also suggests that the QEB is the publication with the greatest impact, with 47 % of the OTS associated with news items in print media on DEE publica-tions (Chart 4.6). The study and surveys indicate that the Quarterly Economic Bulletin is used by a broad set of readers, notably the press, the general public, professional economists and researchers.

A third conclusion relates to the fact that the impact of the other regular publications seems to be markedly lower than that of the Quarterly Economic Bulletin. The evidence for this is the lower number of news items published, and the lower OTS level for the other publications.

With specific regard to the Annual Report, there has also been a significant fall in news items published, reaching a relatively low level in the past few years (Chart 4.7). However, looking at the number of pageviews on Banco de Portugal’s institutional website, the AR holds a prominent position. The number of pageviews for the AR exceeded 11,000 for 2011. Therefore the low coverage of the AR in the news may be related to the fact that it focuses on the description and analysis of economic developments of the year before and is released late in the year. For this reason the relevance for the media is low. By contrast, the high number of pageviews may be due to the fact that the AR presents a detailed analysis of the annual trends in the Portuguese economy, which makes it a useful source of information for consultation, and as a result, a refer-ence document. According to the survey of users of Banco de Portugal publications, over 70 % of respondents use the AR at least once a year. With the recent changes to Banco de Portugal’s publications, specifically the AR and the QEB of April, the QEB will henceforth present this analysis of the previous year.

For the Monthly Economic Indicators, the number of news items remained relatively stable, at a low level per issue (Chart 4.8) but, even so, higher in overall terms than the other publications (apart from the Quarterly Economic Bulletin). The user survey confirms the lower relative relevance of the MEI versus the QEB (50 % of respondents use the MEI at least once a quarter). The number of pageviews is lower too, but still significant (Chart 4.9). The number of pageviews of the MEI is around 3,000 per publication. The split between English-language and Portuguese-language versions is balanced. This contrasts with the AR and the QEB where the Portuguese pageviews predominate. Analysing the monthly average individualised consultations of the Coincident Indicator, we see that it is above the average for the Monthly Economic Indicators (Chart 4.10). Furthermore, it is mainly the English-language version of the Coincident Indicator that is consulted on Banco de Portugal’s institutional website. One may conclude that many users prefer to look exclusively at the Coincident Indicator, and never go as far as looking at the Monthly Economic Indicators publication.

20. TheOTSmeasureiscalculatedfromtheprintmedia'scirculation(datafromthePortugueseAssociationforPrintRunandCirculationControl).Theprintmedia'scirculationisanestimateofthenumberofcopiessold(numberofsubscriptionsplusnewsstandsales).


Regarding the Financial Stability Report, the number of news items increased slightly21 (Chart 4.11). On average there were around 5,000 pageviews of the FSR per publication (Chart 4.12).

A fourth conclusion is that in the period under review, the internet took on increasing importance as a means for releasing news about the publications (Chart 4.13), and as a means for consulting the publications themselves. In 2013, almost 60 % of the news items on DEE’s publications were released through the internet (Chart 4.14). The results of the user survey show that around two-thirds of the respondents exclusively use the electronic version of the publication (Chart 4.15).

The rising relevance of the internet has mirrored a falling relevance of print media. In the print media the specialized media stands out22 (the top six producers of news about Banco de Portugal belongs to the specialised print channels, covering 26 % of the news generated about the publica-tions researched by Manchete).

Furthermore, in interviews held with a number of relevant current and ex-stakeholders and mem-bers of staff of Banco de Portugal, other conclusions were also reached about the publications.

In general, the relevant stakeholders interviewed mention the fact that DEE’s publications are an important vehicle for Banco de Portugal communication.

Some relevant stakeholders and members of staff mentioned the need to simplify the terminology and the message transmitted in the publications, making the language clearer for the reader23. There were also some references to the need for the texts to be more analytical and less descriptive. To this end, both for the Quarterly Economic Bulletin and for the Annual Report, there were occasional references to potential for improvement by providing a less extensive text, including an executive summary.

Regarding the Quarterly Economic Bulletin, various relevant stakeholders mentioned the impor-tance of this publication for releasing economic projections on the Portuguese economy. Some of the relevant stakeholders mentioned the need to improve the communication of the uncertainty behind a projection exercise. Some respondents also suggested the possibility of the articles pub-lished in each QEB and FSR to be available separately. Regarding the Annual Report, this publication was deemed to be relevant for a wide audience as it presents developments in the Portuguese economy for the year before. Regarding the Monthly Economic Indicators, various respondents highlighted the fact that it contains important statistical information, in particular the Coincident Indicators. However, several interviewees mentioned that the publication could be replaced by simplified ways of releasing information. Regarding the Financial Stability Report, it was said to be a particularly important publication for the Portuguese banking system’s reference.

4.2. DEE’s other institutional publicationsThe set of publications falling under DEE’s responsibility include the Bank Lending Survey, Inqué-rito à Situação Financeira das Famílias (household finance and consumption survey), the Occa-sional Papers from the series edited by Banco de Portugal and the Research Newsletter. DEE also produced the book A Economia Portuguesa no Contexto da Integração Económica, Financeira e Monetária (The Portuguese Economy in the Context of Economic, Financial and Monetary Integra-tion), published by Banco de Portugal (see Box 4).

21. Note that the FSR became a biannual publication in 2010.22. However,thegeneralmediahaveamuchgreatershareoftotalnewsthanthespecialisedpress,astheygreatlyoutnumberthespecialisedpress.23. Intheusersurvey,oneofthesuggestionsthatarosethemostwaswritingpublicationsforanon-technicalaudience.


The Bank Lending Survey, held quarterly, is part of the Eurosystem’s Bank Lending Survey and aims to obtain more detailed information on the credit market.

The Inquérito à Situação Financeira das Famílias, started in 2010, is part of the European project called the Household Finance and Consumption Survey24, carried out within the Eurosystem. This project aims to describe in detail the financial situation of households such that the data are com-parable across euro area countries. In Portugal, the Inquérito à Situação Financeira das Famílias is the responsibility of Banco de Portugal and INE. In 2015, the results of this survey (held in 2013) will be published again, and thereafter this publication will come out every two years.

The Occasional Papers series has the purpose of presenting pertinent economic policy topics. These documents contain work by Banco de Portugal economists. Six papers have been pre-sented to date.

The Research Newsletter, called Spillovers, is published twice a year through Banco de Portugal’s institutional website. It was produced for the first time in October 2013 and presents selected research in summary form, a list of recently published articles, new titles in Banco de Portugal’s working papers series and reports from conferences held. In addition, it also announces the upcoming conferences and seminars and includes short interviews with some of the economists. The Newsletter has less impact than DEE’s regular publications but is nevertheless significant, with pageviews of the first edition numbering slightly over 2,000.

24 . Inquérito ao Património e Endividamento das Famílias (householdwealthand indebtedness survey), the Inquérito à Situação Financeira das Famílias'precursor,waspublishedin1994,2000and2006/2007.TheInquérito ao Património e Endividamento das FamíliaswasaPortugal-onlyinitiative,andwasalso the responsibility of Banco de Portugal and INE.


Box 4: Book A Economia Portuguesa no Contexto da Integração Económica, Financeira e Monetária (The Portuguese Economy in the Context of Economic, Financial and Monetary Integration)

In 2009, DEE published a book entitled “A Economia Portuguesa no Contexto da Integração Económica, Financeira e Monetária” (The Portuguese Economy in the Context of Economic, Financial and Monetary Integration). This work covers a broad set of topics on the Portu-guese economy and its economic, monetary and financial integration into the euro area and the EU.

It serves a wide audience. One indicator that measures the frequency of recent consulta-tions of the book is the number of pageviews it has received on Banco de Portugal’s institu-tional website. For 2013 it received over 20,000 pageviews (Chart 4.16).

The book is an example of DEE economists with very different analytical profiles combining their skills. This publication thus reflects the complementary relationship that has to exist between research and policy advice.

The book’s chapters reflect a series of papers published by Banco de Portugal. Some of these original contributions were published in top international scientific journals: The Ame-rican Economic Review, The Review of Economic Studies, Journal of Economic Theory and Journal of Labor Economics, among others.

The book highlights the great change in the Portuguese economy following the economic integration brought by membership of the EU and the globalisation process. It shows that the Portuguese economy has recorded rapid financial integration through its participation in the euro area. Published in 2009, the book predates the financial fragmentation that took place after 2010. The following themes are raised in the analysis of the Portuguese economy: price and wage formation, developments in output and unemployment, external trade, public finances, the financial system and the financing conditions facing households and firms.

Three main objectives are identified in the book: (i) to present a comprehensive overview of the Portuguese economy in the last two decades, (ii) to present empirical and theoretical contributions in an integrated way, and a broad set of statistical information resulting from analysis of existing and new databases and (iii) to encourage academic debate and future research.

Three horizontal issues are covered by the book’s chapters: (1st) the importance of the changes to the regime and incentive structure for economic agents, (2nd) the importance of combining micro- and macroeconomic analyses, and (3rd) the challenge of economic growth in Portugal. In relation to the first issue, the book illustrates four dimensions that reveal the importance of the change to the regime and incentives: the ECB’s monetary policy decisions, fiscal policy decisions, change to the comparative advantages of the Portu-guese economy and the change to the regime following entry into the euro area. The book identifies various examples in relation to the second issue: research on price and salary rigidities (Chapter 3), analysis of export destination decisions by firms (Chapter 5), com-parison between private-sector and public-sector salaries (Chapter 6) and assessment of companies’ and households’ balance sheets and their consequences for macroeconomic stability (Chapter 7). Regarding economic growth in Portugal, the book makes clear that it is a particularly complex issue, which is a major challenge for the future.


4.3. Seminars, courses, conferences and workshops DEE periodically organises various seminars, courses, conferences and workshops.

Regarding the set of seminars and courses carried out by the Department, during the period in question, external seminars accounted for about 50 %, internal seminars approximately 43 % and courses around 7 %.

Over the last five years the number of seminars and courses stabilised, with an annual average of 40 (Chart 4.17).

The external seminars are aimed at specialists from Banco de Portugal and other domestic and foreign institutions, principally university professors and journalists.

The internal seminars comprise seminars designed for DEE economists25. The presentations may be given by the Department’s economists, visiting researchers or those on a research grant and recruitment candidates26. From 2009 the number of internal seminars fell, becoming more infre-quent. This is partly due to increased DEE activity following the economic and financial crisis and the start of the Economic and Financial Assistance Programme to Portugal. In February 2014, a series of internal seminars was started on a weekly basis, called Exchange and reserved for mem-bers of the Department and visiting researchers. These seminars have various purposes: the presentation of papers, the discussion of specific topics, the advanced presentation of articles to be published in the Quarterly Economic Bulletin and the presentation of the economists’ research agenda, among others. The interviews held with DEE staff suggested that these seminars were positively received by DEE economists, significantly boosting information exchange and the dis-cussion of ideas.

The courses normally last a week and are presented by foreign academics essentially in the areas of macroeconomics, microeconomics, econometrics and the financial system. They are open to DEE economists, economists from other Banco de Portugal departments, university professors and economists from other central banks. As they attract the participation of a broad range of Banco de Portugal staff, they have proved to be a very efficient advanced training method.

From 2000 to 2013, DEE organised a total of 37 conferences and workshops, which involved a limited number of participants and were by invitation only. The events organised included Con-ferences on the Labour Market and Monetary Economics, alternating every two years. Also tak-ing place every two years are the ‘Portuguese Economic Development in the European Space’ Conferences. The conferences and workshops involve the participation of staff from Banco de Portugal and other domestic and international institutions.

The survey of users of the regular publications also featured some questions about participation in conferences and seminars. Most respondents often take part in conferences and seminars organised by Banco de Portugal. These events are mainly used for research and to garner gen-eral information on economic and financial affairs. One of the main suggestions forthcoming was to organise seminars and conferences on economic and financial themes of the day as a way to improve the information released to the public.

25. Fromtimetotime,theseseminarsmaybeopenedtootherBancodePortugalstaff.26. TherecruitmentseminarsareoneofthephasesoftherecruitmentprocessinthePhDJobMarketforthosewhohavejustgraduatedfromdoctorateprogrammes,aimingtoallowarestrictedsetofcandidatespre-selectedbydepartmentalstafftopresentPhDJobMarketPapers.


4.4. DEE’s internal communication One of the ways DEE economists communicate within the Department is through the internal seminars (see Section 4.3). Informally, there is also regular contact between economists to share information and discuss work in progress. There are several partnerships within the framework of research projects involving economists from DEE and external institutions.

DEE’s activities are now planned each year, in a document accessible to departmental staff. However, the interviews held with DEE economists revealed that more regular communication is needed on research projects in progress. This regular release of information will give the depart-ment a deeper understanding of DEE’s activity and in turn will generalise techniques developed by individual departmental staff members.

5. Institutional cooperation

When performing its tasks, DEE keeps direct contact with various Banco de Portugal departments and different domestic and international institutions.

5.1. Other departments of Banco de Portugal DEE works in close cooperation with those departments linked to core aspects of Banco de Por-tugal’s mission, particularly with a view to ensuring price stability and contributing to financial sys-tem stability. In this vein, DEE currently collaborates regularly on the one hand with the Markets and Reserve Management Department and on the other with the Financial Stability Department.

Collaboration with the Markets and Reserve Management Department involves preparing month-ly monetary policy briefings for presentation to the Governor. In addition, DEE also collaborates with the Markets and Reserve Management Department on a regular basis in terms of external representation, in the Eurosystem committees where both departments participate. The Mar-kets and Reserve Management Department also shares basic information for some DEE studies and joint policy notes. With the financial crisis, collaboration between the two departments grew markedly, with an increased need for the exchange of information.

Collaboration between DEE and the Financial Stability Department and to a lesser extent with the Banking Prudential Supervision Department is linked to activities relating to financial system stabil-ity. Cooperation with the Financial Stability Department mainly involves the analysis of economic and financial developments, while discussing macroeconomic forecasting, stress tests and risks to the banking system. There is also a regular joint participation in meetings with investors and, where need-ed, in technical groups of the European Systemic Risk Board. In addition, DEE provides analytical instru-ments relevant for the Financial Stability Department’s regular activities. As regards the Financial Stabil-ity Report, DEE participates through signed articles. The DEE also contributes to the follow-up reports on the banking system with empirical studies, which involve frequent collaboration between staff from the two departments. Nowadays cooperation with the Banking Prudential Supervision Department is more sporadic, with one-off contributions from DEE to the analysis of specific topics.

DEE also has a strong interaction with the Statistics Department, using data compiled by the lat-ter and collaborating in order to promote quality statistics. Interaction between the two depart-ments takes place at the level of databases and statistics, notably the Central Balance-Sheet Database, the Central Credit Register, credit market statistics, public finance statistics, banking system-related statistics, and balance of payments statistics, among others.


Collaboration with the International Relations Department takes place mainly in the preparation of the briefing for the Governor and international cooperation initiatives, notably with Portu-guese-speaking African countries. There is also an interaction with the Office of the Governor to prepare supporting documentation on the Portuguese economy for presentation in seminars, conferences and other events.

DEE’s collaboration with Banco de Portugal’s Porto Branch is targeted at developing the Labo-ratório de Investigação em Microdados (BPlim, a Microdata Research Laboratory) at the latter’s premises. This structure will be a partnership among several departments: Statistics Department, DEE, Financial Stability Department and the Banking Prudential Supervision Department.

DEE also collaborates with other departments of Banco de Portugal, although less regularly, such as with the Payment Systems Department.

Some Heads of Department answered the surveys, mentioning collaboration with DEE in various formats, notably in briefings and working groups, bilateral technical clarifications and joint exter-nal representation. They mentioned a number of areas where DEE could boost collaboration with other departments. These included the organisation of conferences, seminars and training courses and participation in joint research projects.

5.2. Domestic institutions DEE has relationships with various domestic institutions, with a long-term close relationship with INE and the Ministry of Finance. In 2012 it established an extended cooperation with the newly created Portuguese Public Finance Council.

Collaboration between DEE and INE is frequent, namely as regards participation in technical working groups, such as the Working Group on Labour Market Statistics and the Working Group for the Development of Macroeconomic Statistics, operating in the framework of the High Coun-cil for Statistics. There is also a very intense formal and informal relationship with the National Accounts Department for monitoring public finances and macroeconomic developments, focus-ing in particular on statistical data compiled by INE.

At the Ministry of Finance, DEE maintains a close relationship with the Office for Economic Poli-cy and International Affairs (GPEARI). This involves some exchange of information and technical opinions on the analysis and projection of macroeconomic and fiscal developments. DEE also participates in joint international representation with the Ministry of Finance, notably in the Eco-nomic Policy Committee of the EU27 and the OECD.

Interaction between DEE and the Portuguese Public Finance Council includes exchanges of views and information on public finance developments in Portugal, and support to the Portuguese Public Finance Council staff training.

DEE also liaises on a non-regular basis with the Ministry of Economy to exchange data needed for research projects or collaborate in joint projects. DEE also interacts with universities, participat-ing in conferences, external seminars and courses organised by DEE and receiving students as interns in the Department.

27. Note that in the Economic Policy Committee of the EU, the main representation belongs to the Ministry of Finance.


Staff from a number of Portuguese institutions answered the surveys, mentioning a close col-laboration at various levels, namely participation in joint working groups, analysis of economic developments, collaboration in external representation and bilateral clarifications. It was men-tioned that there could be an exchange of human resources and training courses with DEE, as well as greater participation in joint research projects, as ways to step-up co-operative relations with these institutions.

5.3. International institutions In terms of international institutions, DEE collaborates with the IMF, the European Commission (from here on “EC”) and the OECD.

DEE’s collaboration with the IMF occurs, under normal circumstances, pursuant to Article IV28 and within the scope of the Financial System Assessment Programme (or FSAP).29 In this context, DEE releases information and provides the relevant clarifications to IMF staff. With the worsening of the economic and financial crisis and afterwards under the Economic and Financial Assistance Programme, IMF’s missions to Portugal became more frequent and involved additional effort from DEE. Also, DEE comments on the texts and interventions of the permanent Portuguese spokesperson in the IMF. In addition, it comments on some documents produced by IMF staff (notably staff reports).

As part of its relationship with the EC, DEE participates in working groups related namely to national accounts and short-term forecasting. In addition, DEE participates on a sporadic basis in a number of seminars organised by the EC and comments on texts produced by EC services.

DEE collaborates with the OECD within the scope of the Portuguese representation in Portugal country reviews,30 Working Group No. 131 and the Economic Policy Committee.

DEE also interacts frequently with IMF, EC and OECD staff monitoring the Portuguese economy.

28. Under Article IV of its Articles of Agreement, the IMF maintains bilateral discussions with members, usually on an annual basis.29. FSAPisconductedonafive-yearorsix-yearbasis.30. TheOECDproducesabiannualreportonPortugal,withapriordiscussionwiththePortugueseauthoritiesonthetopicsunderreview..31.WorkingPartyNo.1oftheOECD'sEconomicPolicyCommitteemeetstwiceayeartodiscussstructuralandmacroeconomicanalysisresearchunder-takenbytheOECD'seconomists.Thisworkinggroupalsoanalysestherecommendationsissuedtocountriesinordertoidentifybestpracticeineconomicpolicy,namelyintheframeworkofthereport GoingforGrowth .


PART 2. Special topics

6. The Portuguese economy

A crucial function of DEE is to increase the knowledge regarding the Portuguese economy. Doing so requires not just the academic type of studies on the economy, which we discussed earlier in section 3, but also reporting recent developments in the economy, forecasting its near future, and advising the Governor on structural issues that will pose policy challenges for Portugal within the euro area. These functions are partly accomplished through three separate outputs: the Monthly Economic Indicators (Indicadores de Conjuntura), the frequent macroeconomic forecasts and the studies on topics of the Portuguese economy made in the Department.

6.1. Economic indicatorsAny analysis of the Portuguese economy presupposes the existence of good, reliable, and fre-quent data on macroeconomic aggregates. The DEE has played an important role in building quarterly series for the Portuguese economy, which are invaluable for researchers in this area. The DEE has also provided long monetary and financial series that span many decades, and which are likewise of great value. Moreover, by assembling every month the Monthly Economic Indica-tors, the DEE makes important data easily accessible to the other economists at the Bank and to outside researchers and members of the informed public. These are one of the most often downloaded Bank publications online, with almost 3,000 downloads per report.

Another important output is the coincident indicators for output and consumption. These are well cited by the press, and carefully monitored by most observers of the Portuguese economy. Producing them on a regular basis must continue to be a function of DEE. The data is already released in a fairly consumer-friendly way, but efforts to improve their accessibility must be con-tinuous.

A more important priority is to continue research and deepen the knowledge about the best coincident indicators are and how to build new indicators. There has been much progress in this area of economics and statistics in the past decade. The current indicators used by DEE are not state of the art, but they are sufficiently close to allow a significant improvement with some effort and resources. Some specific examples are the new approaches to nowcasting, methods to detect turning points, and new efficient filters to use on large datasets, which the DEE has not yet adopted. Given the success of the coincident indicators in Portugal, and the clear demand for them from the private sector, there is some urgency in investing some research time to update and innovate the methods in use.

The time for this research can be obtained by eliminating the text that accompanies the Monthly Economic Indicators since most of it does little more than repeat what is in the tables, without any appreciable analysis. Since the users of the publication emphasize that they are mostly interested in the coincident indicators, a one-page press release that discusses their evolution, and which the DEE already produces, seems enough. Staff in DEE reported that preparing the indicators absorbs a significant amount of time, and simply publishing the numbers while discontinuing the analysis around them would save valuable resources. These would be better directed to research that generates new estimators.


6.2. ForecastingThe DEE produces the main forecasts of the Portuguese economy both for the short run and for the medium term. These are published regularly in the Quarterly Economic Bulletin. The April issue summarizes the developments of the past year, and its implications for the current year, while the June Quarterly Economic Bulletin makes the projections for the following two years, which are then updated in the December issue. The forecasts are especially detailed for inflation, as is normal at central banks.

Forecasts are an essential output of a central bank. The DEE provides essential inputs to the euro wide system forecasts, which are required both to guide monetary policy choices, given the lags between decisions and their effects on the economy, and to ensure that the ECB as a central bank is transparent about its choices and accountable to the public it must serve. Forecasts also provide a public good to private agents, reducing uncertainty in the economy. Even at the Banco de Portugal, for the staff in our survey, learning about the economic forecasts was the most often mentioned reason for reading the institution’s publications. The forecasts from DEE fall into two headings: short-term forecasting and business cycle forecasting. DSGE models are currently used for long-term exercises and simulation analysis.

Short-term forecasting is done with bridge-equation modeling, where several macroeconomic series are related through reduced-form relations in a way that uses past data in order to maximize short-term forecasting success. The models used by the DEE perform satisfactorily at their main task.

At the same time, these forecasts can be improved in terms of the methods used. They do not efficiently use all of the information that is available at any given date, and not enough work seems to go into forecast evaluation. DEE has not adopted dynamic factor models, which have become commonplace in many central banks, and does not do much in reporting distributions with the forecasts, together with a more complete analysis of risks. Moreover, there is no clear iteration between inserting judgment, updating models, and checking consistency of the different variables being forecasted against basic economic models.

The DEE makes business-cycle projections using a macroeconometric structural model. They are a major output of the Department’s work and take a prominent role in economic debate in Por-tugal. They are perceived as perhaps the most reliable and credible estimates of the evolution of the Portuguese economy. The model’s performance at forecasting since 2008 was recently evalu-ated in the April 2013 issue of the Quarterly Economic Bulletin, and compared with the forecasts from the EC, the IMF and the OECD. The forecasts had relatively large errors, as is true for most models during the 2008-09 crisis. The Bank’s forecasts perform better than those in the compari-son list, although not by a large margin.

Here, again, the methods used at DEE could be improved. Over the past 15 years, forecasting at many central banks has moved from the classical macroeconometric models into models that include elements that are more common to DSGE modeling. The research frontier, as repre-sented perhaps by the work done at the Federal Reserve, uses an interaction between judgment and models that ensure that projections across series and over time are internally consistent. Moreover, the models are crucial to consider alternative scenarios in a systematized way.

The staff at the DEE has built one DSGE model, labeled PESSOA. This is a fine small open-economy new Keynesian model, which closely builds on the Global Integrated Monetary and Fiscal model (GIMF) developed at the IMF by Michael Kumhof and Douglas Laxton. It has been sensibly adapt-ed and applied to Portugal, and this required considerable effort to set up that the DEE deserves much credit for. One recent useful application of the model was to calculate fiscal multipliers for Portugal, when there was great debate over the topic both domestically and internationally.


At the same time, while PESSOA was a good first step, it is not today at the frontier in the lit-erature. A comparison between PESSOA and the DSGEs used at other small open economy (for instance the Reserve Bank of New Zealand or the Bank of Canada) or in Europe (the ones at the Banco de España or the ECB) makes this evident. To start, PESSOA is calibrated, not estimated to fit the Portuguese economy. Moreover, PESSOA does not have an operative financial sector, or an account of the role of collateral constraints or other frictions when lending from abroad, so it has difficulty accounting for the sudden stops of capital that pose some of the greatest policy challenges for the Bank. Like most DSGE 6 or 7 years ago, but less so today, PESSOA omits banks and the determinants of credit and interest rate spreads. A case in point comes from the applica-tion of PESSOA to evaluate fiscal multipliers. The model lacks a feedback between developments in public finance and the interest rate that the country faces from abroad. It also assumes that labour income taxes are the main adjustment tool to pay for debt, when in the data changes in VAT have been important.

As important as updating PESSOA is to develop alternative models within the Bank. Combination of forecasts from different perspectives is often an effective way to generate superior forecasts, and there are techniques to do so in a disciplined way. At the frontier of central banks’ practices, diversity of models is the key.

One fruitful starting point might be to draw on research done at other parts of DEE. Not having more of an interaction between the economists that are developing models, and the forecast-ers providing forecasts, is a negative for both. To give one example, the Bank has a comparative strength in labour economics. Detailed models of flows in the labour market could, and should, be used to produce or discipline forecasts about the labour market. The forecasts for unem-ployment produced by DEE seem rudimentary when compared with the models the same DEE uses to study the evolution of unemployment in its more academic publications. Likewise, the DEE already produces an appreciable amount of research on the financial sector, and this will likely increase. Incorporating that knowledge into the forecasts should improve their quality while effectively exploiting synergies.

In sum, the DEE has all the ingredients to produce good forecasts that mix current data analysis with nowcasting, that use many models, and that combine judgment with the internal consistency of a model. For each of these ingredients, current work is not quite at the research frontier, and it does not seem to combine the different parts of current analysis and forecasting in an optimal way. At the same time, one can see through the working papers produced by the economists at the Bank that they are aware of these issues, and some have even produced good research on them. Within the regular publications of the Banco de Portugal, there are good articles develop-ing dynamic factor models for forecasting GDP in Portugal, integrating some financial factors into PESSOA, and working to develop some other DSGE models in the context of the Eurosystem and its new EAGLE model. Some of the members of the staff are aware of the limitations of its cur-rent forecasting models and they have the ability to work in the right directions to improve them. The missing step is to devote more resources and be more ambitious in applying some of this knowledge in a systematic way in order to produce better regular forecasts. Therefore, with more guidance and effort, the Commission is optimistic that significant improvements to forecasting could be achieved.

6.3. Structural studiesDEE should provide studies on structural issues of the Portuguese economy that alert the Bank to emerging challenges, and inform its policy choices in this regard. This is done through many out-


puts, of which at the core are the working papers, but which involve occasional books and regular conferences sponsored by the Bank. The Commission chose to assess this output by asking how had the research at the Bank informed three key questions over the past decade.

The first question, that dates to the start of the euro and which proved crucial during the recent crisis, is whether current account imbalances are important in a monetary union. As Portugal accumulated large current account deficits in the first years of the euro, this was perhaps one of the most important questions facing the Banco de Portugal between 2000 and 2007. The Gover-nor gave speeches on this topic, and the Bank organized a conference where Olivier Blanchard delivered a now celebrated paper arguing that the large Portuguese current account deficits were a cause for concern. Yet, we see little in the Quarterly Economic Bulletin or in the working papers showing that there was significant research output from the DEE on this topic. The staff reports regular discussions, but there is little in terms of research output.

A second question that became particularly relevant between 2007 and 2014 was the role of financial developments in the economy, and especially their interaction with fiscal problems. Here, the DEEs output is satisfactory. In 2007, in the context of the IMF Financial Assessment Program, the Banco de Portugal started using bank loan microdata to study fluctuations in credit and loan defaults. Even before that, there were already some theoretical studies on the interac-tion between monetary policy and financial factors. After the crisis of 2008, there are several high quality research pieces on how financial factors affect the financing of firms, or how being in a currency union may constrain monetary policy but not fiscal policy. The DEE has also systemati-cally produced good research on the state of public finances in Portugal, and on the expected evolution of the Social Security system. Finally, the bi-annual conference in monetary economics, together with the research conference of Banco de Portugal have had in their programmes many presentations of very high quality on these topics.

A third structural question is to what extent can we use micro data to answer macroeconomic questions on the evolution of the labour market in Portugal, or the behaviour of inflation. Here, the performance of the Bank is extremely good. Both in explaining job flows, and in understand-ing how prices are set by Portuguese firms, economists at the Bank have been ahead of most cen-tral banks in the use of detailed micro price data to inform important policy questions. This has resulted in clear useful insights for policy, from understanding how the expansion of the social safety net in Portugal over the last 25 years may have affected unemployment, to accounting for earning gaps across genders and sectors.

7. Create a new Financial Intermediation Division in the DEE

Traditionally, central banks are associated with the conduct of monetary policy. The most recent financial crisis showed that central banks are also valuable for their role in maintaining financial stability. The financial crisis highlighted the importance of micro- and macro-prudential supervi-sion for central banking. It also demonstrated the value of having advanced financial-stability analytical capabilities.

The establishment of the Banking Union made it even more important for central banks in the EU to boost their financial-stability capabilities. The Banking Union will shape financial intermediation in the EU, and will drive European financial integration going forward. Additionally, by setting up the Single Supervisory Mechanism and by placing the Governing Council of the ECB at the center of the policy-making process, the Banking Union will transform the architecture of the institutions responsible for financial stability in the EU and the euro area.


As a result, the role of national central banks in the various areas of financial stability will approach current practice in the area of monetary policy. This will make it critical for central banks, in particular those of smaller countries, to complement their micro- and macro-prudential capabilities with strong analytical capabilities in financial intermediation. Excellence in financial analysis and research will add to central banks’ reputation, and provide them with the necessary knowledge and strategies to pre-serve influence in the design of financial stability policies. It will help central banks with their micro- and macro-prudential responsibilities. Lastly, given the growing evidence on the importance of the financial sector for the economy at large, it will help central banks in their broader responsibilities.

7.1. DEE’s past Financial Intermediation related activitiesOver the years, the DEE has made an outstanding contribution to the Banco de Portugal, in the area of financial stability. This is apparent in the volume and importance of the work it carried out as documented below. It is also apparent in the pioneering role the Department has played in a number of initiatives (e.g. launch of the Financial Stability Report), and in its ability to address new problems and challenges, as evidenced by its contributions to the adjustment strategy of the Por-tuguese banking sector that followed the sovereign debt crisis. The main financial related activities of DEE in recent years included:

• Brief the Governor, and other senior members, including the member of the Advisory Technical Committee (ATC) (the Head of the Department or the Head of the Financial Stability Division as an alternate), and the Head of the DEE, on various topics related to financial stability.

• Contribute on finance-related topics to the Banco de Portugal’s publications, including the Financial Stability Report, Annual Report, Quarterly Economic Bulletin¸ Monthly Economic Indicators, and Bank Lending Survey.

• Participate in initiatives of the European Systemic Risk Board and European Banking Authority, including meetings of the Analysis Working Group and meetings of the Instruments Working Group, and in meetings and activities related to the stress testing exercises of the European Banking Authority.

• Participate in Eurosystem working groups and task forces, including the Macro-prudential Research Network, the Household Finance and Consumption Network, the Bank Lending Sur-vey, and ad-hoc task-forces put together for the preparation of the Structural Issues Report.

• Organize the Banco de Portugal biannual conference on Financial Intermediation, participate in academic conferences, and produce academic papers to be published in refereed journals.

• Other activities: Implement and monitor the quarterly Funding and Capital Plans of the eight major Portuguese banking groups required under the Economic and Financial Assistance Pro-gramme; implement and draft of the reports on quarterly Stress Tests of the eight major Por-tuguese banking groups required under the Economic and Financial Assistance Programme; implement the national Household Finance and Consumption Survey of the Eurosystem.

With the establishment of the Financial Stability Department32 at the Banco de Portugal, and with the ongoing transformation in the EU on the institutional allocation of the responsibilities for maintaining financial stability and for designing financial policy, it is timely for the Banco de Portugal to reconsider its financial-analytical capabilities.

32. In2013,theBancodePortugaldecidedtocreatetheFinancialStabilityDepartmenttohelptheBankpromoteandsafeguardfinancialsystemstability.ThenewdepartmentwasentrustedwiththeresponsibilityofcoordinatingtheBank’sfinancialstabilityrelatedactivitiesandpolicies.


7.2. The case for a Financial Intermediation Division within the DEEIn the past, most of the financial-related contributions of the DEE came from its Financial Stability Division. With the establishment of the Financial Stability Department, some of the DEE’s financial-related responsibilities were transferred to this new department. Notwithstanding this transfer-ence of responsibilities, given the increased importance of research and analytical capabilities on financial-related issues highlighted above, the Commission recommends that the Banco de Portugal creates within the DEE a new division – the Financial Intermediation Division – with the set of responsibilities described below. In our view, the establishment of this division is critical for the Banco de Portugal for the following reasons:

• As we discussed above, ongoing changes in the euro area will require a more active participa-tion by the Banco de Portugal in euro area policy debates on topics related to financial interme-diation and financial stability. An effective participation in these debates will require a great deal of analytical and research support on issues that are increasingly complex. Importantly, it will also require the development of strategies specifically designed to help the Banco de Portugal advance its goals. These functions, by virtue of their technical demands and complexity and because of their dependence on well-designed strategies, are best performed by economists with expertise and research agendas on financial intermediation and financial stability.

• The dynamics of the macroeconomic adjustment in the euro area have been, and will likely to continue to be, dominated by financial factors. Similarly, the challenges Portugal will continue to face for many years, as a result of elevated levels of government, corporate, and household debt, place financial factors at the center of the macroeconomic adjustment for the country. Additionally, financial intermediation in Portugal will continue to be a very important determi-nant of monetary conditions and of the monetary transmission mechanism. Placing the econo-mists with financial expertise in the DEE will allow for synergies between analysis and monito-ring of financial intermediation and macroeconomic analysis and forecasting, and consequently address the aforementioned challenges more effectively.

• Placing the economists with expertise and research agendas on financial-related matters in the DEE will also facilitate the hiring of financial economists, as many economists from the best schools, particularly in the rookie market, are more willing to join research departments where they can continue to undertake research.

• Financial research and the resulting publications will provide the Banco de Portugal with a repu-tation of an institution capable of producing top-notch research in the areas of financial inter-mediation and financial stability. This will help the Banco de Portugal advance its agenda on financial-stability related objectives both domestically and in the euro area. It will also help the DEE provide high-quality technical support to other departments of the Bank on issues related to financial intermediation and financial stability. The benefits of synergies with other econo-mists and peer-pressure suggest that placing financial economists in the DEE will help with their research and have positive externalities for the other economists in the DEE.

• Placing financial economists in a new division of the DEE will increase the likelihood of success of these objectives. This will raise the prominence of financial economists within the DEE, put-ting them at par with the other divisions of the Department, with positive effects on their wor-king incentives. It will increase the chances of financial economists exploiting the synergies that derive from their similar interests and expertise, with positive effects on their performance and contribution to the Bank. Lastly, it will facilitate the management of financial economists and will improve their carrier prospects, which will also have a positive effect on their performance and commitment to the Banco de Portugal.


7.3. Proposed Financial Intermediation Division’s responsibilitiesThe Commission recommends that the new Financial Intermediation Division to be established within the DEE be staffed with the necessary resources (in quantity, quality, and with the appro-priate background skills) to meet the following list of responsibilities related to financial interme-diation and financial stability.

(i) Provide analytical support to the Governor and Senior Management

The move of the ECB Governing Council to the center of policy-making on financial stability is a major change. The same applies to the establishment of the Single Supervisory Mechanism. These impor-tant transformations pose both new demands and challenges for the Banco de Portugal, in general, and for the Governor, as member of the Governing Council. An effective participation in these new arrangements will require not only a great deal of technical support, but also the development of strategies specifically designed to give the Banco de Portugal the opportunity to be active and influential player in the decision making process that will be established to deal with financial mat-ters. The Commission recommends that the Banco de Portugal establishes processes that include the joint participation of the relevant departments of the Bank, but be under the leadership of the Financial Intermediation Division, to develop the aforementioned technical support and strategic thinking and to make both of these available to the Governor and Senior Management.

(ii) Contribute actively to the Financial Stability Report

The development of the Financial Stability Report is a responsibility of the Financial Stability Department. However, given that the analytical and research skills on matters pertaining to finan-cial intermediation and financial stability will continue to reside in the DEE, the Commission is of the view that the DEE, and in particular the Financial Intermediation Division, should participate actively in the production of the report. To that end, the Commission proposes that a formal pro-cess for the production of the report be put in place, and that this process renders the DEE the opportunity not only to contribute with content but also to comment on the entirety of the report. Further, the Commission suggests that the aforementioned process includes the setting up of an editorial committee chaired by the Financial Stability Department but with representatives from DEE (and other departments). The editorial committee would oversee the production of the FSR.

(iii) Provide technical support to other departments of the Banco de Portugal

The Financial Intermediation Division should be open to offer technical support to other depart-ments of the Banco de Portugal on issues related to financial intermediation and financial stabil-ity. In general, this support should be provided on demand and subject to approval by the Finan-cial Intermediation Division / DEE Management team. However, in the cases of micro supervision of financial institutions and macroprudential supervision, given the complexity of these functions and the increased demands and scrutiny of the single supervisory mechanism, the Commis-sion recommends that formal processes be put in place promoting an active participation of the Financial Intermediation Division economists in these activities. These partnerships will provide an opportunity for the Banco de Portugal to lever up the analytical capabilities that will reside in the Financial Intermediation Division.

(iv) Undertake policy analysis on topics deemed important by the Banco de Portugal

There is growing interest in understanding the implications of the ongoing changes both in the institutional allocation of the responsibilities for financial stability, and in the architecture of finan-


cial intermediation in Europe. Similarly, there is a growing interest in understanding the chal-lenges that high levels of indebtedness of the public and private sectors will pose to policymak-ers in Europe. These are just some examples of important questions in need of analysis. The Banco de Portugal, and in particular the Financial Intermediation Division that the Commission proposes be introduced in DEE, is uniquely positioned to make a valuable contribution to these questions. The Bank has an incentive to investigate these issues as they are closely linked to the Bank’s mission. It has the independence and credibility that are critical for participating in these debates. It has access to sources of information necessary to undertake these analyses, and with the establishment of the Financial Intermediation Division, it will be equipped with the intellec-tual capabilities needed to address these and other financially-related policy questions the Bank deems important.

The Commission is of the view that the Banco de Portugal could make a valuable contribution to these debates by producing a book on financial structure, financial integration and financial stability. This project would also afford and opportunity to promote horizontal cooperation within the Banco de Portugal as it would build on contributions from the various departments of the Bank. This cooperative work could be led by the Financial Stability Department. Additionally, it would provide an opportunity for the Banco de Portugal to identify the key areas it should devel-op strategies in order to have an active and influential role in the new arrangements in the EU and the euro area.

(v) Monitor the financial conditions in Portugal

The Financial Intermediation Division should monitor the financial conditions in Portugal, in par-ticular the availability of credit to the various economic sectors. The Financial Intermediation Divi-sion should also cooperate with other divisions in DEE in the analysis of the relevance of financial conditions for economic developments in the Portuguese economy. Macro-financial modeling is one of the fields where synergies are likely to be strongest.

(vi) Conduct research

The Financial Intermediation Division should produce research on topics related to financial intermediation and financial stability with the aim at publishing in academic journals, particularly in the top journals. This activity is very valuable, and therefore should be encouraged. It enhances the reputation of the Banco de Portugal, adding credibility to its views, and strengthening its bargaining power both at home and abroad. It puts pressure on the Financial Intermediation Division economists to maintain both their skill sets and knowledge not only up to date, but also at the highest levels of the profession. This will render economists the ability to provide better advice and technical support to the Governor, Senior Management, and other departments of the Bank. Lastly, the academic research will help DEE in the job market, as economists from the best schools, particularly in the rookie market, do not view favorably institutions that do not value research.


PART 3. Organisation and Human Resources

8. Organisation

The activities and functioning of DEE are closely linked to the mission of Banco de Portugal. In organising its activities, DEE therefore pursues a number of objectives established in the three-year strategic plan for Banco de Portugal.

DEE is particularly involved in two objectives established in the strategic plan for 2014/2016: (1) to actively participate in the Eurosystem and other fora where Banco de Portugal participates and effectively implement monetary policy decisions and (2) to contribute to a society better informed about the country’s economic and financial reality and the activities of Banco de Portugal.

As regards the first strategic objective, DEE mainly focuses on strengthening the analytical qual-ity and relevance of economic research. In addition, DEE is expected to contribute both to the improvement of the support provided to the Governor and representatives of Banco de Portugal when participating in Eurosystem meetings and other fora involving the Bank and the coordina-tion of these involvements. As regards the second strategic objective, DEE is expected to partici-pate in rationalising the Bank’s external communication and promoting the institution’s openness to the outside world.

In terms of operations, a work plan (Plano de Atividades) has been established for DEE based on the Department’s mission. This mission has three main objectives: (i) analysis of the domestic and international economic situation and prospects, (ii) policy advice and (iii) research.

This work plan lists the Department staff’s main activities and projects throughout the year, cov-ering (i) the Department’s regular activities, establishing, whenever possible, a timetable and the person responsible for the task and (ii) a set of research activities that are either to be carried out in the future, currently under development or being finalised, with the aim of setting deadlines and publication goals.

In terms of its current organisational structure, DEE is made up of (i) two Heads of Department, (ii) three research and economic analysis divisions, the Economic Environment and Forecast Division (Área de Conjuntura e Previsão), the Public Finance and Structural Studies Division (Área de Finanças Públicas e Estudos Estruturais) and the Monetary Policy Division (Área de Política Monetária), (iii) a Data Management and Documentation Unit and (iv) a Support Office.

These three divisions of research and economic analysis carry out a number of operational and regular activities and follow a research programme. As regards operational activities, the produc-tion of texts for regular DEE publications and the external representation of Banco de Portugal within the Eurosystem and in Portuguese institutions and / or other international institutions are common to these three divisions.

The mission of the Economic Environment and Forecast Division is to monitor, analyse and pro-ject macroeconomic developments in Portugal. In addition to the aforementioned tasks, the Eco-nomic Environment and Forecast Division is thus responsible for (i) preparing macroeconomic estimates and forecasts, in cooperation with the Public Finance and Structural Studies Division, (ii) developing macroeconomic models and conducting simulations, (iii) systemising and analys-ing data on the Portuguese economic environment, including developing coincident and leading indicators and (iv) maintaining quarterly long time series for the Portuguese economy.


The task of the Public Finance and Structural Studies Division is to prepare research, namely on the efficiency of public expenditure, external trade and the labour market. This division is also responsible for monitoring fiscal outcomes both in Portugal and in European Union and for developing analytical instruments to simulate and forecast fiscal policy developments, in cooper-ation with the Economic Environment and Forecast Division. In addition to these tasks, the Public Finance and Structural Studies Division participates in regular Eurosystem forecast exercises and internal DEE projections on public finance.

The main task of the Monetary Policy Division is to provide advice on euro area monetary policy issues. In particular, this division pays special attention to price behaviour, the transmission of mon-etary policy decisions to the economy and, more recently, the implications of monetary policy for the Portuguese economy. In addition, one of the main tasks of the Monetary Policy Division is to prepare the monthly monetary policy briefing. In the past few years, the Monetary Policy Division has also been assigned tasks related to monetary and financial conditions in the euro area and in Portugal.

The Support Office and the Data Management and Documentation Unit provide support to the activities of DEE.

9. Demography

In the last 10 years the number of staff working in DEE was, on average, 77. The correspond-ing figure for economists was 51. In 2013 the number of economists decreased from 59 to 54 mainly due to some staff relocation to the Financial Stability Department (Table 9.133). In terms of academic degrees, the large majority of economists working in the Department holds a master degree. The share of economists holding a PhD increased substantially from 20 % in 2000 to 33 % in 2013. In the same period there was a substantial reduction in the number of administrative staff from 20 elements to only 8 in 2013.

50 % of the staff are less than 41 years old. The age mode is in the range 41-45 denoting a rather mature Department. About 57 % of the staff has been with the DEE for more than 10 years, and 33 % work in DEE for at least 15 years. However, as of 2013, 30 % of the staff had been with the Department for less than 5 years.

10. Recruitment process

Traditionally, DEE has recruited its economists through three different channels:

• Internships programmes mainly addressed to young graduates from top Portuguese universities.

• Open tenders for economists and open tenders for economists holding a PhD.

• Internal transfers of economists from other departments of Banco de Portugal.

The most relevant recruitment channels are internships and open tenders for economists hold-ing a PhD (these account for 66 % of the recruitments in the period 2000-2013).

The internship programme is essentially a six months remunerated position and is a very impor-tant source of selection and recruitment of high potential economists. After six months of work-



ing experience in the Department, the top performers receive a job offer to join the Department staff with a tenure contract. Until 2009 the recruitment of trainees was done among top gradu-ates from undergraduate courses. Currently, due to the Bologna process, this recruitment is done at the master level. In the period 2000-2013, 37 % of the DEE’s staff was hired through this internship process.

In 2006, DEE introduced some changes in its process to recruit economists with a PhD. Following international best practices, DEE started to recruit young doctorates in the international PhD job market. Until 2006 the recruitment of economists with a PhD was done through an open tender call that was essentially addressed to the domestic market and Portuguese nationals. With the new recruitment policy the Department gained the ability to attract international researchers with a PhD degree from top worldwide universities. The switch in the recruitment policy was a relevant milestone in the Department, contributed to its internationalization, increased diversity among its staff, and reinforced the group of researchers capable of conducting academic-style research. Among economists that are currently in the Department, 12 % have been recruited in the job market.

The recruitment process in the job market follows standard practice: the DEE publicizes, interna-tionally and domestically, the call for applications to the available young PhD positions. In general three economists from DEE (one or two members of the Management team of the Department and one or two senior economists) participate in the US job market and interview and select a short list of candidates who are invited to present a seminar at DEE. A committee, including sen-ior economists belonging to the same scientific field of candidates and some senior researchers, selects the candidates that will receive a job offer. The job offer is basically a tenure contract. Since 2006, 41 candidates were invited to give a seminar at the Banco de Portugal; out of them 9 researchers (7 were non-Portuguese) accepted a job offer.

The other arrangement that the DEE uses to hire economists is through internal transfers. In the period 2000-2013 only 15 % of the economists in DEE were recruited through this channel.

The recruitment policy seems to be adequate. However there are some aspects in the implemen-tation process where in our view there is room for improvement.

Regarding the internships programme it seems that in the recent years almost all trainees received a job offer, suggesting that the Department does not exercise the option to select the best people. One could argue that this is the result of a very demanding ex-ante selection pro-cess (following the same procedures of tests and interviews as any regular recruitment) that ensures high quality trainees. However, it can also occur because the pool of candidates is not big enough or the ex-post selection criteria are not very demanding. In our opinion the internship programme is a good practice to attract talented people. Nevertheless the number of trainees should largely exceed the number of positions available to allow for a further strict selection in the post-training hiring process.

With regards to the job market recruitment process, DEE should pay more attention to the infor-mation that it conveys to candidates. According to the information we gathered from staff inter-views, the candidates do not have a very clear idea about the rules of the game. Some aspects in the contract process are very unambiguous: candidates are offered a tenure contract and they are informed about the remuneration conditions. They also get the information that after 5 years they have the opportunity of getting a substantial salary increase if they obtain a very satisfactory appraisal conducted by an external assessment committee. The same can occur after a subsequent five years period. According to the contract provisions, researchers are expected to devote 70 % of their time to academic-style research and 30 % to policy oriented issues. How-ever, there is a lack of information and transparency in what regards performance expectations:


researchers should be informed about the output they are expected to deliver during, let us say, the first five years, before they are appraised by an external committee. They should also receive clear information about the career path they can aspire to have at the DEE. We recommend the Department to clarify these issues and to establish very clear and transparent rules that should be presented to candidates during the job market interviewing process.

Another limitation of the current recruitment policy relates to the tenure contract offered to researchers. According to the Banco de Portugal’s general recruitment policy (and to the Portu-guese labour law), usually after a six month period experience any person gets tenure, (including the junior staff hired after completing the internship programme). We consider that this policy is against the best practices since does not provide the right incentives to researchers. Following the traditional tenure track system in academia, whenever the circumstances and legal frame-work allow it, we suggest to offer young researchers (recruited in the job market) an initial three-year contract (the maximum length allowed by law for a fixed term contract), with very clear definition of objectives in terms of high level publications and policy contributions. After this three-year period, the researcher should be evaluated by an external committee that comprises international experts in his scientific field. If the assessment is positive the researcher should get tenure otherwise the contract will expire. This standard tenure track policy provides the right incentives for young PhDs to produce high quality research and publish in top journals and, at the same time, reduces the risk to DEE since there is great uncertainty vis à vis the potential of young doctorates to conduct high level academic-style research (despite the fact that they might be graduates from top worldwide universities) or to integrate properly in the institution.

11. Careers

According to the Human Resources Department there is a single career for experts that apply to the entire staff in Banco de Portugal. The concept of a research career does not exist in formal terms. The career of each individual working in the institution is managed according to the set of rules and procedures compiled in the Acordo de Empresa and other internal rules.

The large majority of economists in DEE follow a career path similar to other economists at Banco de Portugal. This staff is dedicated to analytical policy work and policy supporting work, usually as part of the Banco de Portugal current activities, like preparing regular reports and briefing sessions to the Governor or addressing questions raised by other departments. These pieces of analysis can be published either as working papers or in the Banco de Portugal’s reports as articles, involving some analytical work to support policy discussions, or they can be occasional papers based on a non-technical analysis. Many staff members also write academic papers for peer-reviewed publication, and a few even reach top journals. Note, however, that some senior economists particularly involved in policy advice and institutional representation actually have little time to dedicate to academic research or even applied research.

DEE staff expects to have a smooth evolution in their careers, following a path of promotions that lead to small steps upward in the salary scale. The evolution speed in the career is contingent on the annual performance evaluation. However, the salary path is quite flat and staff only gets a significant salary increase if they are appointed to coordinate a specific unit (coordenador de grupo or coordenador de núcleo). At this level, coordinators do not have much managerial respon-sibilities; they just coordinate a group to perform a very well defined task. The next step in the career, coordenador de área, also gets a salary increase but the incremental amount is not as significant as at the level of coordenador de grupo or coordenador de núcleo. Coordenador de área


is, in fact, the key step in terms of assuming a clear management position involving, among other tasks, definition of objectives and staff appraisal. Regarding the evolution in careers we suggest a greater differentiation between economists, according to their performance and to the rules of promotions.

According to our understanding of the current situation, there are no clear quality standards or uniform review process to support the performance assessment of staff doing policy and analyti-cal work. This is a weakness of the current situation since there is not a systematic evaluation of the quality of output and there are no mechanisms in place to prevent low-quality papers from being produced. The only information we could get regarding the quality of analytical policy work (e.g. Quarterly Economic Bulletin articles), policy supporting work and briefings was gathered through interviews that involved several people (including former Governors).

Another aspect relates to the formal annual performance evaluation of the economists in DEE. In spite of the existence of annual plans, a clear definition of medium-term and short-term objec-tives for the Department is crucial for setting down key performance indicators for staff and for the Department as a whole. Most of the analytical work produced by staff is highly decen-tralized and is to a large extent the result of individual initiatives. Relevance of the research is not assessed according to formal priorities settings or quality standards. Also, neither quality of policy oriented output nor relevance of briefing sessions to the Governor are formally assessed. This may introduce inefficiencies in the staff’s annual appraisal process since the tools that are required to have a transparent evaluation of the individual’s performance are not in place.

It is important to stress that the definition of research among DEE’s staff is a rather confusing concept. DEE’s staff does not distinguish between academic-style research and analytical work and it tends to use the research concept as a broad definition. We consider of upmost relevance to clarify what constitutes research and policy work and to include this classification in the per-sonal objectives definition. The quality standards established for the assessment of each category should also be defined and communicated to staff. It should also be made clear that individual annual performance appraisal will be based on the quality assessment of all categories of work: analytical policy work, policy supporting work, briefings and research.

Furthermore there is no formal career management process in the DEE. As a result, staff is not managed according to a career perspective but rather to fulfill the urgent needs of the Depart-ment. A drawback of this situation is that in many cases individuals are compelled to accept man-agement positions in order to attain higher salaries. Quite frequently this is an inefficient situation because the appointed person might perform outstanding technical work but may not have the adequate management profile. On these occasions, the institution looses a proficient economist and gets a poor manager.

Frequently senior staff has an excessive administrative work load or is heavily occupied with rou-tine analytical work that could be performed by junior staff. Given DEE’s limited resources it would be desirable to alleviate senior staff’s workloads by recruiting research assistants to perform those tasks that are analytically demanding but do not require deep knowledge or broad experience. Research assistants could be hired, whenever the circumstances and legal framework allow it, for a two years period, among outstanding master graduates from top universities. This procedure would provide the Department with a pool of talented young people that could contribute to improve the quality of output in some areas and, simultaneously, allow senior staff to perform high level analytical work. We also suggest that research assistants as well as interns have the opportunity of being recruited by other departments of Banco de Portugal if not chosen by DEE.

Staff working in the DEE must also respond to other departments requests, for example by sup-plying information on the Portuguese economy, by contributing with analysis and reports on


policy issues. However, there is very limited interaction and collaboration between DEE’s staff and the staff of other departments; exceptions are often based on personal relationships.

Academic-style research oriented economists form a quite separate group inside the Depart-ment and they have, to some extent, a different treatment in terms of advancement in the career. Currently there are about 15 economists distributed among the different divisions of the Depart-ment and essentially dedicated to this type of research. Of these, 9 were recruited through the job market process and are ready to be submitted to a formal appraisal in order to be promoted. According to the Human Resources Department in Banco de Portugal, these researchers are not formally in a research career (because it does not exist, research is considered as a function not a career) however they benefit from an advancement regime based on a case by case assessment.

So far these economists spend 70 % of their work time producing high level research and some of them have been increasingly successful by academic standards, publishing in top peer-reviewed journals. They are expected to generate new knowledge and techniques to expand and deepen the understanding of policy settings, to support the development of policy strategies and to sup-port the decision-making process. However, research activities are highly decentralized. In fact, there is no mechanism in place to ensure a coherent linkage between the outcome of research and the policy issues that are part of Banco de Portugal’s work programme. Research projects are predominantly established in a bottom-up fashion, with a brief discussion with the Department Management team and a final endorsement by the Board of Directors.

The remaining 30 % of these economists’ time is expected to be dedicated to policy supporting work. There has been an increasing effort to involve these researchers in the current activities of the different divisions where they are integrated whilst maintaining their main focus on research oriented activities. Traditionally, there has been very limited interaction between this group of researchers and the other members of DEE. For example, they did not participate in policy meet-ings and were not debriefed by the Department managers. This was a rather inefficient situation since researchers and policy oriented people could benefit from a two-way communication: on one hand researchers can have a relevant contribution to the discussion and preparation of policy advice; on the other hand the debate of policy issues can raise very interesting questions that might inspire and motivate new research projects and contribute to improve the policy relevance of research output. One explanation to this limited interaction is related to a lack of aligned incen-tives: researchers tend to be more focused on their research since they will be evaluated on the grounds of their scientific production. To overcome this situation the appraisal of research-ers should explicitly include their participation in policy oriented activities. Currently the Depart-ment recognizes the importance of organizing internal seminars where researchers participate, together with the other members of DEE, in the debate of policy issues. In our view, it is important to clarify the career of researchers in the DEE and to establish very transparent rules for their career management. A young PhD recruited in the job market must be aware of what the Depart-ment expects him to produce in terms of output: in the first five -year period these individuals should concentrate 70 % of their time on research and 30 % on policy related issues. It is recom-mended to define an initial period for the PhDs recruited in the job market in which they should be (almost) exclusively focused on their research, to ensure their thesis papers are published. The first appraisal by an external committee will occur at the end of a period of a minimum of 5 years. If the researcher gets a positive evaluation then he / she is promoted with a substantial salary raise and the Department’s Management team, following the recommendations of the external committee, may decide to maintain 70 % of his time dedicated to research for the next 5 years. However, the researcher should be aware that the institution expects that more senior researchers will get higher involvement in policy oriented work. Therefore, as long as researchers attain advanced stages in the career they should gradually increase their contribution to policy oriented work.


In case where the first appraisal is non-satisfactory, meaning the researcher was not able to reach the required level of publications, the Management team should change the profile of the research-er and increase the weight of policy-oriented analytical work to, at least, 50 % of his / her time.

Currently, as there is no career path in research, the promotion of researchers is dependent on the discretionary power of the Head of Department. It is urgent to clarify the current situation especially for those researchers recruited in the job market. Some of them have been waiting for a formal appraisal and it is not clear when this will occur. The evaluation, and possible promo-tion, of the first cohort of researchers is crucial to consolidate the maturity of the system that is in place since 2006.

12. Training

In DEE there is no formal training programme for its staff or any kind of mentoring programme for the newcomers.

The Bank offers languages courses, but at the DEE, only non-Portuguese researchers enroll in Portuguese language courses. There are also computer-skill courses available but the participa-tion of DEE staff is almost zero. This is clearly due to the high level education and specialization of people in the Department.

There are other institutional training offers like Management and Leadership, Team Work, Com-munication, Time Management, Presentation Skills, etc but they are not attractive to the highly qualified staff in the DEE with few exceptions like a course on Ethics, or other specific courses as Incidents Register, Institutional Integration and the New Orthographic Agreement.

DEE’s staff registered a larger participation in specific internal initiatives focusing on technical issues (Table 12.134).

With regards to external training, in the period 2011-2013, DEE’s staff participated mainly in academic conferences, workshops, summer schools and other courses offered in other central banks, or in Portuguese and international universities (Table 12.2).

In terms of training the DEE’s staff also has the opportunity to enroll in a one-year Post-Gradu-ation in Banking, Financial Regulation and Supervision offered by Nova School of Business and Economics and sponsored by the Banco de Portugal.

According to the Human Resources Department the average number of training hours (18.2 in 2013) is significantly lower in DEE than in the whole bank (33.3 hours). However the Human Resources Department does not register attendance at internal research seminars or other spe-cialized seminars that are organized by the Department, which represent a significant number of hours and have a large participation of DEE’ staff. We recommend the definition of suitable metrics to compute the number of training hours that must include the attendance at internal research seminars and other specialized initiatives, which are the appropriate training forums for economists in DEE. These metrics should be communicated to the Human Resources Depart-ment.

We also recommend that staff in the DEE with management responsibilities should be compelled to take training courses in management and leadership since economists usually do not have training on these skills.



13. Mobility

According to the Human Resources Department, in the period 2011-2013 17 people were trans-ferred from DEE to other departments. In 2013, due to the internal reorganization, 6 economists were transferred from the DEE to the Financial Stability Department (Table 13.135). During the same period only one person, an administrative staff member, was transferred to DEE.

According to the information provided by the Human Resources Department, there were some intra-department moves in DEE in the 2012-2013 period: 7 economists changed from one divi-sion to another (horizontal mobility). In the same period 7 people were appointed to new func-tions (including the current Head of DEE), and among them 6 moved significantly up in the salary scale.

In terms of external mobility, the DEE recruited 13 new staff members in the period 2011-2013; in the same period 5 people returned to the Department after spending some time working in another public institution or after a nonpaid leave (Table 13.2). Therefore the Department ben-efited from the entry of 18 economists. At the same time 3 staff members left the DEE due to retirement and a total of 10 members are on leave (working in other public institutions or non-paid leave). Overall, the difference between external entries and exits is five members represent-ing a positive balance to the DEE.

In sum, the DEE has a rather stable internal structure and there is not much staff mobility. DEE staff does not follow the practice of spending time at other departments of the Bank. Short visits of DEE staff, including researchers, to other departments of Banco de Portugal or to other European central banks should be encouraged since they can provide very positive learning experiences.



PART 4. Recommendations and suggestionsThis section sets out the complete list of the Commission’s recommendations and suggestions.

List of recommendations and suggestions

Main recommendation 1: Set up an accountability framework.

Associated recommendations:

1.1. Design the accountability framework to encompass the full programming cycle: planning, monitoring, evaluation and communication.

1.2. Inform all staff about the planning and programming of activities.

1.3. Evaluate progress of the accountability framework taking into account the goals and perfor-mance indicators defined.

1.4. Define key performance indicators (KPIs).

1.5. Execute and evaluate the planning and programming of activities building on Banco de Portugal’s strategic planning.

1.6. Conduct regular external evaluations of DEE.

Main recommendation 2: Improve human resource management.


2.1. Align human resource management with the accountability framework.

2.2. Set clear goals and performance indicators for the staff based on the accountability framework.

2.3. Assess DEE’s performance against performance indicators defined.

2.4. Clarify DEE’s work in terms of the following categories: (i) policy advice, (ii) briefings, (iii) policy supporting work, (iv) analytical policy work and (v) research.

2.5. Base annual objectives and individual annual performance appraisals on the work categories of Recommendation 2.4.

2.6. Define and communicate to DEE the quality standards for the assessment of each work category.

2.7. Define profiles for the staff according to the work to be done.

2.8. Aim to publish the research produced in DEE in leading-edge scientific journals. (Recommen-dation shared with Main recommendation 4)

2.9. Adopt a points system for classifying scientific publications and quantifying research work, simi-lar to the ECB’s system (see Box 3). (Recommendation shared with Main recommendation 4)

2.10. Establish a procedure for evaluating the analytical work, policy supporting work and briefings to the Governor.

2.11. Evaluate the analytical work, policy supporting work and briefings to the Governor, other members of the Board of Directors and other senior management, based on (i) relevance for explaining the policy issue being analysed, (ii) appropriateness of the analytical tools, (iii) rele-vance of the data used, (iv) writing clarity and adequacy of document structure, (v) adequacy of information to form an opinion and (vi) pertinence of conclusions for policy decisions.


2.12. The evaluation outlined in 2.11 could be conducted through surveys of DEE ‘clients’, including the Governor, other Banco de Portugal departments, and even external entities that consider the central bank reports as inputs for their policy decisions.

2.13. Another possibility could be to set up an annual prize for the best article published in the Quarterly Economic Bulletin and the Financial Stability Report.

2.14. Banco de Portugal could consider a revision of the human resources policy, namely through a formal career development and management process.

2.15. As part of the integrated analysis of careers launched by Banco de Portugal, staff could follow an alternative career allowing access to top salary levels without managerial responsibilities: the advisor career.

2.16. Candidates for the advisor career would be individuals with exceptional talent, for example, specialists that make notable contributions to policy areas or researchers that maintain an outstanding publications record.

2.17. The selection of candidates for the advisor career should be carried out by a committee com-prising external members using very demanding criteria that should be set transparently.

2.18. Build a strategic recruitment plan for the next five years for young PhDs, with each DEE area specifying the number of researchers and research profiles needed.

2.19. Select candidates in the job market each year according to that strategic recruitment plan.

2.20. Revise the current process for recruiting in the job market, setting clear and transparent rules on the career and evaluation system for young PhDs in the job market. These rules must be communicated to the candidates in the job market interviews.

2.21. Coordination of the job market recruitment process should be the responsibility of the DEE’s Management team, in coordination with the Human Resources Department.

2.22. The job market recruitment committee should comprise the most research-active economists.

2.23. The job market recruitment committee could also comprise researchers from different areas and, if appropriate, specialised staff from other Banco de Portugal departments.

2.24. The initial contract term for young PhD researchers recruited in the job market should be three years, whenever the circumstances and legal framework allow it.

2.25. The contractual process should include a very clear definition of objectives in terms of publi-cations and policy contributions to be carried out by researchers at the start of their careers.

2.26. After the three-year period, the researchers should be evaluated by an external committee that comprises international experts in their scientific field.

2.27. If the evaluation is positive the researchers should get tenure, otherwise the contract should expire.

2.28. It is recommended to define an initial period for the PhDs recruited in the job market in which they should be (almost) exclusively focused on their research, to ensure their thesis papers are published.

2.29. Create the position of research assistant.

2.30. Hire strongly analytical research assistants, for a two-year period, whenever possible within the applicable legal framework.

2.31. Consider the possibility of a number of trainees greatly exceeding the number of positions available to increase DEE’s selection capability.

2.32. Promote internal and external mobility as part of career management.

2.33. Define suitable metrics to compute the number of training hours in the DEE that must include attendance at internal research seminars and other initiatives, such as scientific conferences and workshops. These metrics must be communicated to the Human Resources Department.


2.34. Promote training courses in management and leadership for DEE staff with management responsibilities.

2.35. Revise the visitor researchers programme in order to ensure that during their stay they take part in projects of interest for DEE.

Main recommendation 3: Identify financial intermediation and European financial integration as priorities for the next three years and create a financial intermedia-tion division.


3.1. Identify financial intermediation and European financial integration as key priorities for the next three years.

3.2. Create a Financial Intermediation Division in DEE.

3.3. Establish processes that include the joint participation of the relevant departments, under the leadership of the Financial Intermediation Division, to develop the technical support and strategic thinking needed for the Governor and Board of Directors.

3.4. Retain in DEE analytical and research skills on matters pertaining to financial intermediation and financial stability. The Financial Intermediation Division should focus research on this area, for publication in top journals.

3.5. DEE should contribute to policy analysis on topics deemed important by Banco de Portugal, with particular regard to (i) the implications of the ongoing changes both in the institutional allocation of the responsibilities for financial stability, and in the architecture of financial inter-mediation in Europe and (ii) the challenges that high levels of indebtedness of the public and private sectors will pose to policymakers in Europe.

3.6. Produce a book on financial structure, financial integration and financial stability in Portugal, led by the Financial Stability Department, and promoting horizontal cooperation between the Banco de Portugal departments involved in these areas.

3.7. The Financial Intermediation Division should monitor the financial conditions in Portugal, in particular the availability of credit to the various economic sectors. This division should also cooperate with other DEE divisions in analysing the relevance of financial conditions for eco-nomic developments in Portugal.

3.8. Provide technical support through the Financial Intermediation Division to other departments of Banco de Portugal on issues related to financial intermediation and financial stability. In general, this support should be provided on demand and subject to approval by the Division’s or DEE’s Management team.

3.9. In the cases of micro supervision of financial institutions and macroprudential supervision, formal processes could be put in place promoting the active participation of Financial Inter-mediation Division economists in these activities.

3.10. Set up a cooperation agreement between DEE and the Financial Stability Department, cove-ring three key areas: (i) drafting of texts for Banco de Portugal’s publications, both regular and occasional, (ii) preparation of policy briefings in the financial stability area and (iii) analytical activities and / or research.


Main recommendation 4: Pursue excellence in research.


4.1. Aim to publish the research produced in DEE in leading-edge scientific journals. (Recommen-dation shared with Main recommendation 2)

4.2. Separate research work from analytical work more clearly within the tasks of each DEE eco-nomist, so that clear and differentiated expectations are set on each type of work for each individual economist.

4.3. Adopt a points system for classifying scientific publications and quantifying research work, simi-lar to the ECB’s system (see Box 3). (Recommendation shared with Main recommendation 2)

4.4. Identify the priority research areas for Banco de Portugal but in general, comprehensive terms, giving substantial freedom to researchers regarding themes to explore in these areas.

4.5. Provide regular information to the staff on ongoing DEE activity, particularly through presen-tations related to research projects, in order to stimulate collaboration and cross fertilisation between teams.

4.6. Ensure there is time for free research, rewarding those researchers who are the most suc-cessful, and taking a long-term approach to allow for the delays in publication in scientific journals.

On modeling:

4.7. Update, revise and improve short-term forecasting models, incorporating new tools, in parti-cular, dedicate research time to updating and innovating the methods used in the production of Coincident and Leading Indicators.

4.8. Innovate in the forecasting methods used in the economic cycle projections, partly using research work already carried out within DEE more actively and efficiently.

4.9. Increase rigour in forecasting tasks, comparing their execution and performance to that of other central banks, and including forecasting tasks in the research objectives subject to regu-lar appraisal.

4.10. Integrate forecasting more closely with research, allowing synergies between the two and innovating in the use of models and data.

4.11. Develop a diversified set of forecasting tools.

Main recommendation 5: Rethink communication.


5.1. Identify the Quarterly Economic Bulletin as the flagship publication.

5.2. Entrust one senior economist with the task of editing the Quarterly Economic Bulletin.

5.3. Associate the Quarterly Economic Bulletin’s production process with internal procedures aimed at early debate of key issues.

5.4. Make the Quarterly Economic Bulletin articles accessible to a wider audience.

5.5. Autonomise electronic access to the following products in Banco de Portugal’s institutional website: economic projections, signed articles, special issue texts, the Portuguese economy, while nevertheless retaining the unity of the Quarterly Economic Bulletin as a publication.

5.6. Consider the possibility of issuing economic projections a few days before the release of the Quarterly Economic Bulletin, with a devoted press release.

5.7. The special issues texts, published in the Quarterly Economic Bulletin, should be signed.


5.8. Consider changing the Annual Report to a standard corporate Annual Report format.

5.9. Remove the text accompanying the Montlhy Economic Indicators and limit this publication to factual tables and charts.

5.10. Issue a devoted press release to accompany the Coincident Indicators.

5.11. Make clear that the Working Papers is a series and establish that they will be, as a rule, sub-mitted for publication in academic-refereed journals.

5.12. Define Working Papers as a metric to assess DEE’s academic output in real time.

5.13. Keep Banco de Portugal’s Working Papers series as a responsibility of DEE but open it to sub-missions from the staff of other departments.

5.14. Create Staff Technical Notes as a means for releasing analytical work mainly related with the texts of the Quarterly Economic Bulletin.

5.15. Discontinue the Occasional Papers.

5.16. Promote the research newsletter, Spillovers, in order to raise its profile.

5.17. Rethink the contribution of DEE to external communication, identifying the targeted groups, their demands and the purposes of communication.

6. Other relevant recommendations.

6.1. Promote diversity of viewpoints and analytical tools in DEE debates.

6.2. Banco de Portugal could consider management processes enabling a matrix format manage-ment between departments and various areas in the same department.

6.3. Provide timely and detailed information on the models used in DEE, both to increase Banco de Portugal’s transparency and to expose these models to healthy external scrutiny from other researchers.

6.4. Banco de Portugal may consider broadening access to the databases created in the institution.

6.5. Update and expand the research support tools on a permanent basis, including IT support and software purchasing (for example additional STATA and MATLAB licences).


Charts and Tables

Table 1.1 International institutional representation of Banco de Portugal in 2013

Face-to-face meetings Conference calls

ESCB / Eurosystem 480 275

European Union 358 72

Of which:

European Commission and Eurostat 60 1

European Supervision Authorities 174 31

ESRB 39 34

Portuguese-speaking Countries 15 3

IMF 2 -

BIS 13 -

OECD 15 1

Other 34 6

Total 917 357

Source: Banco de Portugal.

Table 1.2 International institutional representation of the DEE in 2013

Face-to-face meetings Conference calls

ESCB / Eurosystem 39 2

Of which:

Monetary Policy Committee 35 2

Competitiveness Research Network 4 -

European Union 10 -

OECD 4 -

Total 53 2



Chart 3.1 Developments in the total number of articles published in peer-reviewed journals and in articles weighted by ECB ranking

0

70

140

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Number of Art icles Number of art icles weighted by ECB ranking


Chart 3.2 JEL CODES of the articles published in peer-reviewed journals (number of articles)

0 45 90 135 180

Economic History

Health, Education and Welfare

Regional, Real Estate and Transportation Economics

Business Administration and Business Economics, Marketing, Accounting

Public Economics

EconomicDevelopment,TechnologicalChangeandGrowth

Industrial Organization

Microeconomics

Financial Economics

International Economics

LabourandDemographicEconomics

MathematicalandQuantitativeMethods

Macroeconomics and Monetary Economics

Agricultural and Natural Resource Economics, EnvironmentalandEcologicalEconomics



Chart 3.3 Concentration of the number of articles (by economist)

0%

50%

100%

0 10 20 30 40 50 60 70

number of articles % of total*

Number of economists

* Total includes the articles published in the 2000-2014 period.Source: Banco de Portugal

Chart 3.4 Working Papers published in the Banco de Portugal series

0

15

30

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013



Table 3.1 List of publications according to the Point System for Publication of the ECB

TIER 1*American Economic ReviewEconometricaJournal of Political EconomyQuarterly Journal of EconomicsJournal of FinanceReview of Economic Studies

TIER 1Journal of Business and Economic StatisticsJournal of International EconomicsJournal of Monetary EconomicsJournal of European Economics AssociationJournal of Financial EconomicsReview of Financial StudiesReview of Economics and Statistics

TIER 2American Economic Journal – MacroeconomicsBiometrikaEconomic JournalFrontiers of...: Berkeley electronic journalsGames and Economic BehaviourInternational Economic ReviewInternational Journal of Central BankingInternational Journal of ForecastingJournal of Applied EconometricsJournal of Development EconomicsJournal of Economic PerspectivesJournal of Economic TheoryJournal of EconometricsJournal of Financial EconometricsJournal of Financial IntermediationJournal of Financial Quantitative AnalysisJournal of Human ResourcesJournal of Labour EconomicsJournal of Money Credit and BankingJournal of Public EconomicsJournal of the American Statistical AssociationQuantitative EconomicsRand Journal of EconomicsReview of Economic Dynamics

TIER 3Advances …: Berkeley Electronic journalsAmerican Economic Journal – MicroeconomicsAmerican Economic Journal – Applied EconomicsAmerican Economic Journal – Economic PolicyAnnals of statisticsTier 3 (continuation)Applied EconomicsBrookings Papers on Economic ActivityCambridge Journal of EconomicsCanadian Journal of EconomicsEconomic InquiryEconomics LettersEconomic TheoryEconometric TheoryEconometric reviewsEconometrics JournalEconomic Modelling

Tier 3 (continuation)European Economic ReviewEuropean Financial ManagementEuropean Journal of FinanceFinancial ManagementIMF Economic ReviewIndustrial and Labor Relations ReviewInternational Journal of Industrial RelationsJournal of Banking and FinanceJournal of Common Market StudiesJournal of Comparative EconomicsJournal of Economic Behaviour and OrganisationJournal of Economic Dynamics and ControlJournal of Economic GrowthJournal of Economic HistoryJournal of Economic LiteratureJournal of Empirical FinanceJournal of Financial MarketsJournal of Financial Services ResearchJournal of Financial StabilityJournal of ForecastingJournal of Futures MarketsJournal of Industrial EconomicsJournal of International Money and FinanceJournal of Law and EconomicsJournal of Law Economics and OrganisationJournal of MacroeconomicsJournal of Mathematical EconomicsJournal of Policy ModellingJournal of Risk and UncertaintyJournal of Time Series AnalysisJournal of Urban EconomicsJournal of Population EconomicsJournal of Portfolio ManagementJournal of the Royal Statistical Society (series A)KyklosLabour EconomicsLand EconomicsMacroeconomic DynamicsMathematical FinanceNBER Macro AnnualOxford Bulletin of Economics and StatisticsOxford Economic PapersOxford Review of Economic PolicyPublic ChoiceReview of Income and WealthReview of FinanceScandinavian Journal of EconomicsScottish Journal of Political EconomyStudies in Nonlinear Dynamics and EconometricsTheoretical EconomicsEconomicaEmpirical EconomicsWeltwirtschaftliches Archiv

TIER 4All other journals in EconLit, including …German Economic ReviewNational Tax JournalRisk Magazine


Chart 4.1 Evolution of the total number of news items relating to the DEE and a breakdown by publication

0

1.000

2.000

0

800

1600

2007 2008 2009 2010 2011 2012 2013

Total (right-hand scale) QEB MEI AR FSR Other publications

Source: Manchete.

Chart 4.2 Evolution of the total number of news items relating to the Quarterly Economic Bulletin and a breakdown by media type

0

750

1500

0

400

800

2007 2008 2009 2010 2011 2012 2013

Total (right-hand scale) Internet Print media Television Radio

Source: Manchete.


Chart 4.3 Breakdown of the total news items relating to the DEE’s publications (for 2013)

127467%

27515%

201%

19210%

1287%

QEB

MEI

AR

FSR

Source: Manchete.

Chart 4.4 Number of pageviews of the Quarterly Economic Bulletin through Banco de Portugal’s institutional website (from 2012; data per publication)

0

5.000

10.000

Mar. 12 Jun. 12 Sep. 12 Dec. 12 Mar. 13

English Portuguese



Chart 4.5 Frequency of consultation of the DEE’s regular publications

0

50

100

Weekly Monthly Quarterly Anually Occasionally Never

QEB FSR AR MEI

Source:SurveycompletedbyusersofBancodePortugal’spublications.

Chart 4.6 Breakdown of OTSs per DEE publication

5647%

2521%

98%

108%

2016%

QEB

MEI

AR

FSR

Other publications

Source: Manchete.


Chart 4.7 Evolution of the total number of news items relating to the Annual Report and a breakdown by media type

0

70

140

0

40

80

2007 2008 2009 2010 2011 2012 2013


Source: Manchete.

Chart 4.8 Evolution of the total number of news items relating to the Monthly Economic Indicators and a breakdown by media type

0

180

360

0

100

200

2007 2008 2009 2010 2011 2012 2013


Source: Manchete.


Chart 4.9 Number of pageviews of the Monthly Economic Indicators through Banco de Portugal’s institutional website (from 2012; data per publication)

0

2.000

4.000

Jan. 12 May. 12 Sep. 12 Jan. 13 May. 13 Sep. 13 Jan. 14

English Portuguese

Source: Banco de Portugal.Note:Nodataavailablebetween16February2012and30March2012.

Chart 4.10 Number of pageviews of the Coincident Indicator through Banco de Portugal’s institutional website (from 2012; data per calendar month)

0

3.500

7.000


English Portuguese



Chart 4.11 Evolution of the total number of news items relating to the Financial Stability Report and a breakdown by media type

0

125

250

0

70

140

2007 2008 2009 2010 2011 2012 2013


Source: Manchete.

Chart 4.12 Number of pageviews of the Financial Stability Report through Banco de Portugal’s institutional website (from 2012; data per publication)

0

3.000

6.000

May. 12 Nov.12 May. 13

English Portuguese



Chart 4.13 Evolution of the total number of news items relating to the DEE and a breakdown by media type

0

1125

2250

0

600

1200

2007 2008 2009 2010 2011 2012 2013


Source: Manchete.

Chart 4.14 Each media type’s share of news items relating to the DEE (for 2013)

59%24%

13%

4%

Internet

Print media

Television

Radio

Source: Manchete.


Chart 4.15 Shares of each support type used to consult the DEE’s publications

3%

66%

31%Paper

Internet

Paper and Internet

Source:SurveycompletedbyusersofBancodePortugal’spublications.Nota:Thepublicationsincludedinthischartare:QEB,FSRandAR.

Chart 4.16 Number of pageviews of the Book A Economia Portuguesa no Contexto da Integração Económica, Financeira e Monetária (The Portuguese Economy in the Context of Economic, Financial and Monetary Integration) through Banco de Portugal’s institutional website (from 2012; data per calendar month)

0

1.750

3.500


English Portuguese



Chart 4.17 Seminars and courses organised by the DEE

0

35

70

2000 2002 2004 2006 2008 2010 2012

External Seminars Internal Seminars Courses


Table 9.1 DEE staff (as of 31 December 2013 of each year)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Total 65 72 74 77 74 71 74 75 79 82 80 80 79 73

Management team 3 3 3 3 3 3 3 3 3 3 3 3 3 2

Staff 42 51 53 57 56 54 57 58 63 67 66 66 68 63

Economists 35 43 45 47 46 43 46 47 52 55 54 55 56 52

Graduate 6 8 9 8 9 7 8 7 8 9 9 6 6 5

Masters and similar 22 26 25 28 26 26 27 28 29 29 29 31 31 30

Doctorates 7 9 11 11 11 10 11 12 15 17 16 18 19 17

Others 7 8 8 10 10 11 11 11 11 12 12 11 12 11

Specific / secretariat tasks 3 4 4 3 3 3 3 3 2 3 4 4 3 2

Administrative staff 15 12 12 12 10 9 9 10 10 8 6 6 5 5

Support staff 2 2 2 2 2 2 2 1 1 1 1 1 0 1



Table 12.1 Examples of specific internal initiatives focusing on technical issues

• Annual Meeting of the Banco de Portugal

• Workshop on top-down stress tests

• The Dog that didn’t bark

• Seminar on PPP’s

• Orçamento do Estado para 2014

• Iceland’s experience regarding financial crisis

• Global Financial Stability Report FMI

• Financial Systemic Risk, Basel III, SIFIs

• Encontro de Lisboa

• Desarollo de la economia de Colombia

• Dealing with Household Debt

• Annual Summer Conference – CIRSF

• Conference on Financial Supervision Basel III

• Banking Crises and Remedies


Table 12.2 DEE’s external training (2011-2013)

Year Training Entity

2013 Economic Modelling and Forecasting Central Bank of Malta

2012 Applied Bayesian econometrics for central bankers Bank of England

2012 Euro Area Business Cycle Network Training School Banca d’Italia

2013 Financial Stability and Macroprudential Policy Bank of Korea

2013 2013 Econometrics Summer School using STATA CEMAPRE / ISEG

2011 Macroprudential Regulation of Banks Centro de Estudios Monetarios y Financieros

2013 Panel Data Econometrics Centro de Estudios Monetarios y Financieros

2011 The Econometric Analysis of Mixed Frequency Data EABCN – Euro Area Business Cycle Network

2011 Unemployment and Matching EABCN – Euro Area Business Cycle Network

2012 Euro Area Business Cycle Network Training School EABCN – Euro Area Business Cycle Network

2012 Forecasting Inflation EABCN – Euro Area Business Cycle Network

2012 Global VAR modelling using the GVAR Toolbox 1.0 EcoMod Modeling School

2012 Stress Testing 2.0 Event Production s.r.o.

2013 A Course on Panel Data Models Faculty of Economics, University of Cambridge

2012 Financial Stability, Systemic Risk, and Macro-Prudential Policy IMF – International Monetary Fund

2012 Financial Stability, Systemic Risk, and Macro-Prudential Policy IMF – International Monetary Fund

2013 Empirical Banking – Methodological Aspects Barcelona Graduate School of Economics

2013 Simulation and Estimation of DSGE Models ISEG – Lisboa School of Economics & Management

2013 PET 13 Católica, Lisbon

2013 PET 13 Católica, Lisbon

2011 Spring Course on Labor Econometrics University of Coimbra

2012 Spring Course on Nonstationary Panel Time Series Methods University of Coimbra

2013 Spring Course Bayesian Econometrics University of Coimbra

2012 The Science and Art of DSGE Modelling University of Minho

2013 Discrete Choice Models For Cross Section University of Minho


Table 13.1 Internal mobility – DEE (2011-2013)

Year Entries Exits Total

2013 1 9 -8

2012 0 6 -6

2011 0 2 -2

Total 1 17 -16


Table 13.2 External mobility – DEE (2011-2013)

Entries ExitsDifference

entries / ExitsRecruitments End of requisitions

Retirements / Terminations

Start of requisitions

2013 6 0 0 4 2

2012 3 3 2 3 1

2011 4 2 1 3 2

Total 13 5 3 10 5



Annexes

Annex I. Independent Commission’s Mandate for Assessing DEE’s Activities

Banco de Portugal has the objective of creating and maintaining within its Economics and Research Department the analytical and human capability to contribute to its tasks as a member of the Eurosystem and as the Portuguese Republic’s central bank. To this end, Banco de Portugal must be able to attract and retain talent of the quality level found in the best research depart-ments of organisations responsible for conducting economic policy.

To assist with DEE’s strategic guidance, the Board of Directors of Banco de Portugal decided to hold an independent assessment of DEE’s activities, through a Commission specially appointed for the purpose. The Commission will be chaired by Vítor Gaspar and will have three further members.

The Commission will have DEE’s support in accessing data and documentation needed for the assessment, as well as the support of a senior economist for the compilation of the information gathered. The Committee is authorised to interview members of DEE and their counterparts out-side the Department. This assessment will cover the following areas:

• The quality, relevance and impact of the policy advice within the framework of the Eurosystem;

• The quality, relevance and impact of the research into the Portuguese economy;

• The quality and quantity of the research published in scientific journals;

• The impact and relevance within the framework of Eurosystem and European System of Central Banks bodies;

• The quality of the models, analytical tools and analysis of other Banco de Portugal departments’ activity;

• DEE’s contribution to Banco de Portugal’s communication, namely in the areas of information dissemination and economic analysis;

• DEE’s contribution to Banco de Portugal’s ability to attract, retain and develop professional talent of the quality level found in the best organisations in the field around the world.

The Commission will produce a set of recommendations based on the analysis. The Commis-sion’s analysis and recommendations will be published after considering the comments of DEE and Banco de Portugal’s Board of Directors.

The Commission’s final report must be submitted to Banco de Portugal’s Board of Directors by 30 June 2014.


Annex II. Acronyms and abbreviations

AR or Annual Report Annual Report – The Portuguese Economy

Commission Economics and Research Department Evaluation Commission

DEE or Department Economics and Research Department

EC European Commission

ECB European Central Bank

ESCB European System of Central Banks

EU European Union

FSR Financial Stability Report

IMF International Monetary Fund

INE Statistics Portugal

MEI Monthly Economic Indicators

MPC Monetary Policy Committee

NCB National Central Banks

OECD Organisation for Economic Co-operation and Development

OTS Opportunities-to-see

QEB Quarterly Economic Bulletin

Statutes Statutes of the European System of Central Banks and of the European Central Bank

Annex III. Sources of information used

• The Treaty on European Union, the Statutes of the European System of Central Banks and of the European Central Bank, the Constitution of the Portuguese Republic, the Organic Law of Banco de Portugal;

• Banco de Portugal’s Company Agreement; Internal Rules and Regulations of Banco de Portugal; Programming and Strategic Planning Documents of the ECB and the Eurosystem; Programming and Strategic Planning Documents of Banco de Portugal;

• Information provided by DEE’s Management team and other managers in DEE and Banco de Portugal;

• Face-to-face interviews with current and previous members of the Board of Directors of Banco de Portugal, senior management of DEE and other Banco de Portugal’s departments, DEE divi-sions and unit heads and DEE staff;

• Written questionnaire from key internal and external interested parties;

• Research on the impact of the publication in the media carried out by the company Manchete;

• Survey of scientific publications produced by DEE staff;

• Consultation of scientific publications;

• Consultation of institutional publications;

• Evaluation reports on central banks and other entities involved in conducting policy.