IMF Working Papers

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

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

November 15, 2024

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Philip Abradu-Otoo, Joseph K. Acquah, James Attuquaye, Simon Harvey, Francis Loloh, Shalva Mkhatrishvili, Valeriu Nalban, Daniel Ngoh, Victor Osei, and Michael Quansah. "Quarterly Projection Model for the Bank of Ghana: Extensions and Applications", IMF Working Papers 2024, 237 (2024), accessed December 3, 2024, https://doi.org/10.5089/9798400292156.001

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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 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.

Subject: Inflation, Inflation targeting, Monetary policy, Output gap, Prices, Production

Keywords: Agricultural sector, Forecasting and Policy Analysis, Ghana, Inflation, Inflation targeting, Monetary Policy, Output gap, Quarterly Projection Model, Transmission Mechanism

Publication Details

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