GreenREFORM-EUApplications / Projects
2026 – 2027 · Secretariat of the Faroese Economic Council
Faroe Islands: a model for long-term fiscal sustainability
From 2026 to 2027 DREAM is working with the Secretariat of the Faroese Economic Council to develop a macroeconomic model for assessing the long-term sustainability of public finances in the Faroe Islands. The model builds on the macroeconomic core of GreenREFORM-EU, adapted to the Faroese economy. The Secretariat is actively involved in model development and implementation, with the aim of using the model for its own analyses.
What the model does
The model produces a long-term baseline projection of the Faroese economy and public finances under current legislation and policies. It provides a consistent framework for analysing how economic developments affect government revenues, expenditures and fiscal sustainability over time.
The baseline draws on existing projections of labour market participation and other key demographic and economic variables, including projections developed by DREAM as part of other projects and analyses. By combining these with the macroeconomic model, the project establishes a framework for assessing the long-term outlook for the Faroese economy and public finances.
Relation to GreenREFORM-EU
The Faroese model builds on the macroeconomic core of GreenREFORM-EU. The core provides a general framework for modelling the interactions between households, firms, the public sector and the wider economy.
The project adapts that framework to Faroese economic conditions, with a particular focus on long-term public finances rather than climate and energy policy. It is a separate project, with its own funding, and it is not a Technical Support Instrument country or a Version 2.0 output.
Timeline
- 2026 and 2027. Model development and implementation, in collaboration with the Secretariat.
Who takes part
- DREAM. Develops and implements the macroeconomic model.
- Secretariat of the Faroese Economic Council. Commissions the model and takes part in its development and implementation.
What it delivers
- Macroeconomic model. A model adapted to the Faroese economy.
- Baseline projection. A projection reflecting current legislation and policies.
- Standard shocks. A framework for analysing the macroeconomic and fiscal effects of predefined shocks.
- Documentation. Written descriptions of the baseline projection, its assumptions, and the model’s responses to standard shocks.
Results
The project is ongoing. The final model is expected by the end of 2027. DREAM will list public notes and papers under Analyses when the Secretariat releases them.
Read more
- Version 2.0, the edition of GreenREFORM-EU documented on this site
- Model documentation, for the core the Faroese model builds on
Record
| Commissioned by | Secretariat of the Faroese Economic Council |
|---|---|
| Delivered by | DREAM |
| Period | 2026 to 2027 |
| Model | A Faroese macroeconomic model, built on the macroeconomic core of GreenREFORM-EU |
| Focus | Long-term sustainability of public finances, rather than climate and energy policy |
| Outcome | A model, a baseline projection, a framework for standard shocks, and documentation |