Quarterly Projection Model for India: Key Elements and Properties
42 Pages Posted: 23 Mar 2017
Date Written: February 2017
This paper outlines the key features of the production version of the quarterly projection model (QPM), which is a forward-looking open-economy gap model, calibrated to represent the Indian case, for generating forecasts and risk assessment as well as conducting policy analysis. QPM incorporates several India-specific features like the importance of the agricultural sector and food prices in the inflation process; features of monetary policy transmission and implications of an endogenous credibility process for monetary policy formulation. The paper also describes key properties and historical decompositions of some important macroeconomic variables.
Keywords: Central banks and their policies, Monetary policy, Monetary transmission mechanism, Interest rate policy, Forecasting models, Inflation targeting, India, Asia and Pacific, inflation targeting; Reserve Bank of India; inflation episodes in India; forecasting models; monetary policy models; model calibration; monetary policy rules; monetary policy simulations, Reserve Bank of India, inflation episodes in India, monetary policy models, model calibration, monetary policy rules, monetary policy simulations, Model Evaluation and Testing, Forecasting and Other Model Applications, Forecasting and Simulation, Monetary Policy (Targets, Instruments, and Effects), Studies of Particular Policy Episodes
JEL Classification: C52, C53, E12, E31, E42, E47, E52, E58, E65
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