Quarterly Projection Model for the Bank of Ghana

39 Pages Posted: 13 Sep 2022

See all articles by Philip Abradu-Otoo

Philip Abradu-Otoo

Government of the Republic of Ghana - Bank of Ghana

Ivy Acquaye

Government of the Republic of Ghana - Bank of Ghana

Abubakar Addy

Government of the Republic of Ghana - Bank of Ghana

Nana Kwame Akosah

Research Department, Bank of Ghana; University of the Witwatersrand, Wits Business School, Students

James Attuquaye

Government of the Republic of Ghana - Bank of Ghana

Simon Harvey

Government of the Republic of Ghana - Bank of Ghana

Shalva Mkhatrishvili

Independent

Zakari Mumuni

Government of the Republic of Ghana - Bank of Ghana

Valeriu Nalban

International Monetary Fund (IMF)

Date Written: September 1, 2022

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

JEL Classification: F31, E26

Suggested Citation

Abradu-Otoo, Philip and Acquaye, Ivy and Addy, Abubakar and Akosah, Nana Kwame and Attuquaye, James and Harvey, Simon and Mkhatrishvili, Shalva and Mumuni, Zakari and Nalban, Valeriu, Quarterly Projection Model for the Bank of Ghana (September 1, 2022). IMF Working Paper No. 2022/169, Available at SSRN: https://ssrn.com/abstract=4216339

Philip Abradu-Otoo (Contact Author)

Government of the Republic of Ghana - Bank of Ghana

Ivy Acquaye

Government of the Republic of Ghana - Bank of Ghana ( email )

Abubakar Addy

Government of the Republic of Ghana - Bank of Ghana ( email )

Nana Kwame Akosah

Research Department, Bank of Ghana ( email )

P.O. Box GP 2674
One Thorpe Road
Accra
Ghana
+233 267801235 (Phone)

University of the Witwatersrand, Wits Business School, Students ( email )

Johannesburg
South Africa

James Attuquaye

Government of the Republic of Ghana - Bank of Ghana ( email )

Simon Harvey

Government of the Republic of Ghana - Bank of Ghana ( email )

Shalva Mkhatrishvili

Independent ( email )

Zakari Mumuni

Government of the Republic of Ghana - Bank of Ghana ( email )

Valeriu Nalban

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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