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Quarterly Projection Model for the Bank of Ghana

Philip Abradu-Otoo, Ivy Acquaye, Abubakar Addy, Nana Kwame Akosah, James Attuquaye, Simon Harvey, Shalva Mkhatrishvili, Zakari Mumuni and Valeriu Nalban

No 2022/169, IMF Working Papers from International Monetary Fund

Abstract: The paper describes the Quarterly Projection Model (QPM) that underlies the Bank of Ghana Forecasting and Policy Analysis System (FPAS). The New Keynesian semi-structural model incorporates the main features of the Ghanaian economy, transmission channels and policy framework, including an inflation targeting central bank and aggregate demand effects of fiscal policy. The shock propagation mechanisms embedded in the calibrated QPM demonstrate its theoretical consistency, while out-of-sample forecasting accuracy validates its empirical robustness. Another important part of the QPM is endogenous policy credibility, which may aggravate policy trade-offs in the model and make it more realistic for developing economies. Historical track record of real time policy analysis and medium-term forecasting conducted with the QPM – as a component of the broader FPAS analytical organization – establishes its critical role in supporting the Bank’s forward-looking monetary policy framework.

Keywords: Ghana; Forecasting and Policy Analysis; Quarterly Projection Model; Monetary Policy; Transmission Mechanism; out-of-sample forecasting accuracy; D. monetary policy credibility channel; projection model; impulse response; policy analysis; Inflation; Output gap; Inflation targeting; Exchange rates; Central bank policy rate; Global (search for similar items in EconPapers)
Pages: 39
Date: 2022-09-02
New Economics Papers: this item is included in nep-ban, nep-cba and nep-dge
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