MTBE v2025: new version of the Quarterly Model of the Banco de España

The Quarterly Model of the Banco de España (MTBE, by its Spanish acronym) is a large-scale macroeconometric model used for medium-term macroeconomic forecasting of the Spanish economy, as well as for performing scenario and policy simulations. The model is for a small, open economy within a monetary union. It is specified as a large set of error correction equations. This document presents an update of the model, which includes some specification changes and a re-estimation using data up to 2022. The main change in this version is the explicit inclusion of expectations in the main equations. This makes the model suitable for performing simulations under different assumptions about the way agents form their expectations. The update also enhances the financial channels included in the model and introduces additional detail in aspects that have gained importance in recent years, such as energy shocks.