Quarterly Projection Model for the Bank of Ghana: Extensions and Applications

Philip Abradu-Otoo, Joseph Acquah, James Attuquaye, Simon Harvey, Francis Loloh, Shalva Mkhatrishvili, Valeriu Nalban, Daniel Ngoh, Victor Osei and Michael Quansah

No 2024/237, IMF Working Papers from International Monetary Fund

Abstract: The paper documents the latest extensions of the Bank of Ghana’s Quarterly Projection Model (QPM), used regularly to produce policy analysis and forecasts in support of the Bank’s policy processes. The decomposition of GDP allows to separate the agriculture and oil sectors, driven by exogenous and international developments, from non-agriculture non-oil activities, which are more relevant from the central bank’s perspective of assessing the business cycle position. Inter-sectoral price spillovers and their role in the formation of inflation expectations are explicitly accounted, with important policy implications. Specific model applications – including impulse response functions and simulations of shocks that affect agricultural production, e.g., those caused by climate disruptions; and counterfactual simulations to evaluate recent policy choices – highlight the usefulness of the extended QPM in providing a more detailed account of the economic developments, enhance forecast coverage, and broaden its underlying narrative, thus strengthening the BOG’s forward-looking policy framework.

Keywords: Ghana; Forecasting and Policy Analysis; Quarterly Projection Model; Monetary Policy; Transmission Mechanism; A. impulse response; impulse response function; reaction function; policy analysis; Bank of Ghana's Quarterly Projection Model; price spillover; Inflation; Output gap; Inflation targeting; Real interest rates; Global (search for similar items in EconPapers)
Pages: 36
Date: 2024-11-15
New Economics Papers: this item is included in nep-afr, nep-ban and nep-cba
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