The Swedish Agency for Public Management

Agency analysis of the National Institute of Economic Research (2014:31)

On commission by the Government, Statskontoret (the Swedish Agency for Public Management) has carried out an agency analysis of Konjunkturinstitutet (the National Institute of Economic Research, NIER). The administration of an external expert group with the task of carrying out a specific evaluation of the agency's forecasting operations was also included in the commission. The expert group is responsible for its own assessments and recommendations.

How the National Institute of Economic Research fulfils its commission

The National Institute of Economic Research (NIER) makes macro-economic forecasts, carries out environmental-economic research and makes investigations of the economic climate. Its annual statistics production includes twelve issues of Konjunkturbarometern (the Economic Tendency Survey). The reports are used as the basis for financial policy and environmental policy. In the agency analysis it is noted that NIER carries out its commission well. The quality of the agency's analyses is judged to be good. NIER reports produced in the areas of forecast, environmental economics and the Economic Tendency Survey are of high quality and are relevant for the government.

Expert group's assessment of the agency's forecasting operations

The expert group judges that NIER forecasting operations work well. The assessment refers to 1997-2013, with a forecast period of two years. The expert group pointed out that the clarity of the forecast presentations could be improved and that the agency's analytical models could be used more widely. According to the statistical tests, there is generally no distortion in the forecasts for the following macro-economic variables: GDP growth, inflation, unemployment and financial savings in the public sector. In common with other forecasters, NIER overestimated economic growth during the crisis years of 2008 and 2009, but was slightly slower than other forecasters in its downward revision as new data became available.

Issues particularly highlighted in the agency analysis

In accordance with its commission, Statskontoret shall illustrate in particular how NIER's financial budget and conditions relate to its commission, how its organisation responds to the commission and how government control works - including informal contacts between the Government Offices and NIER. Statskontoret shall also illustrate how NIER manages to take on and perform commissions that, by their very nature, require other skills than those used for the authority's main tasks, as well as any organisational, financial, legal or other changes that should be implemented on the basis of the assessment of NIER's forecasting operations, among other factors.

Statskontoret's assessment is that NIER has the financial resources and other conditions that are required to fulfil its commission. The various commissions that NIER has been given have been carried out within the given financial framework and are of good quality.

The organisation is primarily organised to fulfil its tasks in accordance with the instruction received. In recent years, there have been an increasing number of commissions for structural analyses and environmental-economic analyses in addition to the instruction. Statskontoret's assessment is that NIER has so far managed to receive and carry out these commissions.

Supporting documents and material from NIER are important for the Government Offices' ongoing work with the structuring and follow-up of economic-political measures. The government's need for analyses has increased, which is reflected in special commissions. Statskontoret is of the opinion that government control is adequate, but that it could be developed further. The informal contacts between the Ministry of Finance and NIER are important, and are a natural consequence of NIER's commission to continuously assist the Ministry of Finance with data and model development. However, it is necessary to review the form of these contacts.

NIER has both ongoing operations and other special commissions, such as environmental-economic analyses and structural analyses. Statskontoret considers that NIER has managed this remit so far.

Within the framework of the agency analysis, we have not found any reasons for organisational, financial, legal or other changes. The expert group has pointed out, at an overall level, the need for clarification in relation to the Fiscal Policy Council and the agency's role and task in relation to other governmental agencies, including the Swedish National Financial Management Authority and the Swedish National Debt Office. In the context of agency analyses, Statskontoret has not had the opportunity to further investigate these matters. However, they are important questions that need further investigation.

There are a number of factors that are particularly important for NIER's ability to carry out its remit in the future. These can be divided into recommendations to the government and to NIER.

Recommendations to the government

Clarify objectives for overall operations

NIER has three areas of operation: forecasts, environmental economics and the economic barometer. The objectives specified for the agency relate to forecasting operations, which make up a large part of its total operations. Objectives should be formulated to cover all three of the agency's areas of operation.

Make higher demands on performance reporting

The government should make higher demands on the agency's performance reporting, in particular regarding costs for the agency's performance, in order to obtain better data for its assessment of operations, cost-effectiveness and future resource requirements.

Clarify NIER's role regarding environmental-economic analyses and structural analyses

The government needs to have environmental-economic analyses carried out at short notice. It should be possible to meet the need within the framework of NIER's activities and resources, but may require partially changed working methods and a different set of priorities. The government should make it clear what role NIER will have with respect to commissions to carry out environmental-economic analyses at short notice.

In recent years the government has given an increasing number of commissions to NIER relating to different types of structural analyses, including the analysis of the effects of economic-political measures. This affects the management of resources, model development and planning at NIER. The government should clarify what role the agency will have in terms of structural analyses.

Recommendations to NIER

Management of informal contacts

Informal contacts between the agency and the principal are important. However, there is a risk that resources become tied up to a degree that is neither predicted nor desirable, and which limits the agency's ability to plan, manage and lead its operations. NIER should establish internal guidelines to support these informal contacts.

Consider introducing time registration

NIER lacks a uniform time registration system, which, among other things, limits the ability to follow up costs for different types of final tasks, such as reports by the agency. A developed time registration system can support the agency's ability to plan, control and follow-up activities, as well as facilitating pricing in sales operations.

Consider the introduction of a quality assurance process outside the agency

Production quality by NIER is good. There is a risk, however, that ongoing forecasting operations could become too dependent on individuals. NIER should consider developing a quality assurance process outside the agency. Such a process could help to maintain and even increase the quality of the agency's production. This work should strive to increase collaboration with universities and colleges, and engage external personnel to a greater extent.

Introduce guidelines for sales operations

NIER carries out sales of services. However, there are no uniform guidelines for these operations. NIER should discuss its sales operations' scope and area in consultation with its principal.