Quarterly Projection Model for the Bank of Ghana

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

September 2, 2022

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Philip Abradu-Otoo, Ivy Acquaye, Abubakar Addy, Nana Kwame Akosah, James Attuquaye, Simon Harvey, Shalva Mkhatrishvili, Zakari Mumuni, and Valeriu Nalban. Quarterly Projection Model for the Bank of Ghana, (USA: International Monetary Fund, 2022) 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

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.

Subject: Central bank policy rate, Exchange rates, Financial services, Foreign exchange, Inflation, Inflation targeting, Monetary policy, Output gap, Prices, Production

Keywords: Central bank policy rate, D. monetary policy credibility channel, Exchange rates, Forecasting and Policy Analysis, Ghana, Global, Impulse response, Inflation, Inflation targeting, Monetary Policy, Out-of-sample forecasting accuracy, Output gap, Policy analysis, Projection model, Quarterly Projection Model, Transmission Mechanism

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/169
Stock No:

WPIEA2022169
ISBN:

9798400218187
ISSN:

1018-5941

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