A Novel Quarterly Macroeconomic Forecasting Framework: Illustration on the Case of Bosnia and Herzegovina

Tibor Hlédik, Rilind Kabashi, Maria Arakelyan, Belma Colakovic and Elma Hasanović

No 2026/036, IMF Working Papers from International Monetary Fund

Abstract: This paper describes the Quarterly Macro Forecasting Framework (QMFF), which is a novel approach to macroeconomic policy analysis and forecasting. At the core of this framework is a Quarterly Projection Model, with main behavioral equations quantified as deviations of real variables from their trends. The model comprises a simultaneous system of calibrated equations that cover the main sectors of the Financial Programming and Policies framework, as well as key accounting restrictions within and across sectors. By explicitly accounting for trends observed in real variables and relative prices, the framework ensures a balanced growth path and constant expenditure shares relative to nominal GDP. The QMFF is sufficiently flexible to be adapted to different monetary frameworks and exchange rate regimes. After describing the framework, the paper illustrates its implementation for policy analysis and forecasting on the case of Bosnia and Herzegovina. The empirical work with the model includes not only calibration but also testing the model’s dynamic and in-sample simulation properties.

Keywords: Semi-structural Modeling; Financial Programming; Macroeconomic Policies; Forecasting and Policy Analysis; Gap Models; Scenario Analysis; Bosnia and Herzegovina; IMF working papers; consumption deflator; deflator equation; expenditure share; import deflator; Exchange rates; Exchange rate arrangements; Imports (search for similar items in EconPapers)
Pages: 86
Date: 2026-02-27
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