Quarterly Projection Model for the National Bank of Rwanda

By Jan Vlcek, Mikhail Pranovich, Patrick Hitayezu, Bruno Mwenese, Christian Nyalihama

December 21, 2020

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Jan Vlcek, Mikhail Pranovich, Patrick Hitayezu, Bruno Mwenese, and Christian Nyalihama. Quarterly Projection Model for the National Bank of Rwanda, (USA: International Monetary Fund, 2020) accessed December 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

National Bank of Rwanda (BNR) modernized monetary policy and transited to the price-based policy framework in January 2019. The Forecasting and Policy Analysis System (FPAS) is the cornerstone for the new forward-looking framework, which mobilizes and organizes resources and sets processes for regular forecasting rounds. The core of this system is a structural macroeconomic model for macroeconomic analysis and projections to support the BNR staff’s policy recommendations to the monetary policy committee. This paper documents the quarterly projection model (QPM) at the core of the FPAS at the BNR. The model is an extension of the canonical structure in Berg et al (2006) to reflect specifics of the interest-rate-based policy framework with a managed exchange rate, the effect of agricultural sector and harvests on prices, and the role of fiscal policies and aid flows.

Subject: Agricultural production, Central bank policy rate, Exchange rates, Financial services, Food prices, Foreign exchange, Inflation, Prices, Production, Real exchange rates

Keywords: Agricultural production, Aid, Central bank, Central bank policy rate, Demand shock, Depreciation rate, Depreciation target, Energy price inflation, Exchange rates, Fiscal Impulse, Floating exchange rate, Food inflation, Food price inflation, Food prices, Forecasting and Policy Analysis, Global, Headline inflation, Inflation, Inflation deviation, Managed Exchange Rate, Monetary Policy, Money market, Nominal exchange rate depreciation, Price gap, Quarterly Projection Model, Real world oil price gap, Rwanda, Transmission mechanism, WP

Publication Details

Pages:

46
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/295
Stock No:

WPIEA2020295
ISBN:

9781513564630
ISSN:

1018-5941

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